Philippine Peso: BSP tightening bias on inflation risks – DBS

DBS Group Research economists Radhika Rao and Chua Han Teng report that the Bangko Sentral ng Pilipinas (BSP) increased its policy rate by 25 basis points to 5.0% to curb inflation expectations and strengthen the Philippine Peso (PHP). The PHP is the only ASEAN-6 currency to underperform in Q3 2026 (-0.8% against the USD), while others have appreciated between 0.9-1.7%.

Despite the BSP's decision being in line with expectations, DBS remains vigilant as above-target inflation may allow for another measured rate hike this year. The central banks of ASEAN-6 countries are anticipated to maintain a hold stance throughout the remainder of 2026, with the Philippines as the sole exception.