THE Bangko Sentral ng Pilipinas (BSP) is expected to maintain a more hawkish monetary policy stance compared to other Southeast Asian peers as rising inflation strengthens the case for further interest rate increases.
In its latest regional assessment, Japanese investment bank Nomura placed the BSP and Bank Negara Malaysia (BNM) in the more hawkish camp, while viewing Bank Indonesia (BI) and the Bank of Thailand (BOT) as relatively less hawkish.
“The tone should remain hawkish, in our view, with BSP continuing to pledge vigilance and remain focused on containing these risks and anchoring inflation expectations,” Nomura said.
The research firm expects the BSP to raise its key policy rate by another 25 basis points to 5.25 percent on Thursday, marking a fourth consecutive rate hike.
The BSP’s Monetary Board has raised key policy rates three times so far this year, bringing the benchmark rate to 5.0 percent.
Nomura said inflation risks remain tilted to the upside, as a possible strong El Niño could put further pressure on food prices, while higher energy and fertilizer costs continue to fuel inflation.
“Core inflation also soared, which we believe BSP will judge as a sign of more second-round effects that require additional tightening,” Nomura said.
“The tone of the policy statement and comments will likely remain hawkish,” it added.
Consumer price inflation accelerated to 7.2 percent in September, driven by higher prices of key food items and energy. This brought average inflation in the first nine months of 2026 to 5.4 percent, above the BSP’s 2- to 4-percent target range.
Core inflation, which excludes selected food and energy items, also climbed to 4.7 percent in September from 4.1 percent in August and 2.6 percent in the same month last year.
“We also continue to flag the risk of further hikes by BSP thereafter given upside inflation risks from El Niño,” Nomura said.
The BSP cut its 2026 inflation forecast to 6.1 percent from 6.4 percent, but that for 2027 was raised to 5.4 percent from 4.5 percent.
In a separate commentary, Deutsche Bank said the current monetary policy stance may not be enough to anchor inflation expectations effectively.
“The current policy stance may not be sufficiently restrictive to effectively anchor inflation expectations,” Deutsche Bank said.
It also expects the central bank to raise its key policy rate by 25 basis points, as faster-than-expected inflation and rising global oil prices heighten pressure on monetary policy.
Deutsche Bank said measures of underlying inflation indicate that broad price pressures have intensified since then.
It noted that global oil prices have also climbed to around $100 per barrel in October, up from about $90 per barrel in August, adding to inflation risks.
“While the previous meeting highlighted concerns about growth due to tighter monetary conditions, these are, in our view, secondary to the central bank’s primary mandate of price stability and low, stable inflation,” Deutsche Bank said.
