THE Bangko Sentral ng Pilipinas (BSP) could continue lowering interest rates after next week despite rising inflation, Maybank Research said.
“Recent inflation developments support continued easing, but argue for greater caution in the near term,” it said in a commentary.
“We will see the BSP adopt a more measured approach, balancing the still-soft growth conditions against emerging inflation risks.”
Maybank Research maintained its view that policy rates would be cut by a total of 50 basis points this year, bringing the benchmark rate down to 4.0 percent, as inflation stabilizes within the target range with manageable upside pressures.
Consumer price growth accelerated for a second straight month to 2.0 percent in January, returning to the 2.0- to 4.0-percent target following an 11-month run below the range.
The increase was due to higher utility costs, which Maybank said could “still persist” along with “imported cost pressures, volatile global oil prices and peso movements.”
“However, the increase in core inflation suggests some modest widening of underlying price pressures, warranting closer monitoring in the months ahead,” it added.
Core inflation, which excludes select food and energy items, rose to 2.8 percent last month from 2.4 percent.
Maybank said it expected inflation to rise to 2.2 percent this year from 1.8 percent in 2025, driven by continued cost-push pressures from higher utility tariffs and imported goods.
“Private consumption and an accommodative monetary policy stance should continue to provide a key buffer for domestic demand amid the still benign inflation environment,” it added.
Consumer prices could rise above the lower end of the target range this year, Maybank said.
“Faster price growth in 2026 will be driven by a low base from last year, which may be offset by the resumption of rice imports,” it added.
“As such, inflation will remain firmly within the central bank’s target, leaving space to cut policy rates.”
The BSP’s policymaking Monetary Board is scheduled to meet on Thursday and Metrobank Research said it was likely to implement another quarter-point rate cut, bringing the benchmark rate down to 4.25 percent.
Further easing in April could still be on the table if inflation remains subdued.
“However, faster inflation from higher rental and utility prices could eat away at any space the BSP has left, potentially closing the door on further reductions to the policy rate,” Maybank Research said.