With inflation starting the year firmly within the Bangko Sentral ng Pilipinas’ target range, Metropolitan Bank & Trust Co. said monetary easing remains firmly on the table, offering continued support to economic growth even as price pressures begin to normalize.
Philippine headline inflation rose to 2 percent year-on-year in January from 1.8 percent in December, still well within the central bank’s 3±1 percent target band. Core inflation, which excludes volatile food and energy prices, also edged higher to 2.8 percent, pointing to early signs of strengthening demand as the domestic economy regains momentum.
Metrobank noted that the latest uptick in inflation was largely driven by housing, water, electricity, gas, and other fuels, reflecting annual rental adjustments outside the National Capital Region and higher power rates. These increases were partly offset by softer food prices, with food inflation easing to 1.1 percent as most major food items posted declines and rice prices continued to fall, helping contain overall price growth.
“While inflation is moving higher from recent lows, it remains well-anchored within the central bank’s target,” Metrobank said, adding that the current environment gives policymakers room to keep supporting growth even as demand-side pressures gradually emerge.
Looking ahead, the bank maintained its 2026 inflation forecast of 3.3 percent, citing low base effects and improving demand that could push prices higher in the second half of the year. These pressures, however, are expected to be partly cushioned by softer consumer spending and supply-side factors, including the lifting of the rice import ban, which should help stabilize food prices.
Against this backdrop, Metrobank expects the Bangko Sentral ng Pilipinas to proceed with further monetary easing. The bank projects a cumulative 50 basis points in policy rate cuts this year, bringing the reverse repurchase rate down to 4 percent by year-end, as authorities strike a balance between sustaining growth and preserving price stability.
Metrobank said that in the absence of major supply-side shocks, the current inflation trend supports a measured and data-driven policy approach, one that allows the economy to build momentum without reigniting excessive price pressures.
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