The Bangko Sentral ng Pilipinas said inflation remained well contained at the close of 2025, reinforcing expectations that price pressures will stay manageable over the medium term even as economic growth faces fresh headwinds.
In a statement on the medium-term inflation path, the BSP noted that headline inflation slowed to 1.8 percent in December 2025, well within its forecast range of 1.2 to 2.0 percent.
Full-year inflation is projected to average below the lower end of the central bank’s target band, largely reflecting earlier declines in rice prices that helped temper overall food costs.
Looking ahead, the central bank maintained a benign outlook for prices, with inflation expectations described as well anchored.
For 2026 and 2027, inflation is expected to settle comfortably within the 3.0 percent target, with a margin of plus or minus one percentage point, providing policymakers with room to focus on supporting economic activity without jeopardizing price stability.
At the same time, the BSP acknowledged growing concerns on the growth front. The Monetary Board observed that the outlook for domestic economic expansion has weakened further, as business sentiment continues to soften amid governance issues and heightened uncertainty over global trade policy.
These factors have weighed on private sector confidence and investment decisions.
Despite these challenges, the central bank said domestic demand is expected to recover gradually in the coming quarters. The BSP pointed to the lagged effects of earlier monetary policy easing, alongside anticipated improvements in public spending, as key drivers that could help revive consumption and investment activity.
On balance, the Monetary Board signaled that the current monetary policy easing cycle is approaching its conclusion. Any additional rate cuts, the BSP said, are likely to be limited and will depend heavily on incoming economic and inflation data, underscoring a more cautious and data-driven approach as policymakers navigate a period of subdued growth but stable prices.