September inflation surge fuels rate-hike bets
Economists are increasingly expecting the Bangko Sentral ng Pilipinas to hike interest rates again this month after inflation surged to 7.2 percent in September, as broadening price pressures and risks from oil, transport fares and El Niño threaten to keep inflation elevated.
Inflation in the Philippines has surged to 7.2 percent in September, prompting economists to believe that the Bangko Sentral ng Pilipinas (BSP) will increase interest rates again this month. Broadening price pressures, including oil, transport fares, and the impact of El Niño, are contributing to elevated inflation levels. Major banks such as BPI, Chinabank Research, and Fitch Solutions’ BMI now expect the Monetary Board to raise the benchmark rate by another 25 basis points at their October meeting, bringing it to 5.25 percent from the current 5 percent.
However, opinions differ on whether the BSP will need to tighten further after October. BPI anticipates a second hike in December, potentially bringing the key policy rate to 5.50 percent by year-end. Chinabank Research also expects another 25-basis-point increase in October, warning that the "worst of this inflation episode" may still be ahead due to sustained high food and oil prices.
BMI has revised its outlook, forecasting a 25-basis-point hike in October and raising its end-2026 policy rate projection to 5.25 percent. Fitch Solutions has also raised its 2026 inflation forecast to 5.9 percent and its 2027 projection to 5 percent. Analysts believe that the weaker Philippine peso, fueled by higher oil prices and expectations of additional US Federal Reserve rate hikes, supports the case for further tightening.
However, BMI believes that weak economic growth in the first half of 2027 will limit additional tightening, potentially keeping the policy rate around 5.25 percent.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
