MANILA — With inflation staying within the Bangko Sentral ng Pilipinas’ (BSP) target range at the start of the year, Metropolitan Bank & Trust Co. (Metrobank) said conditions remain supportive of further monetary easing in 2026, providing a boost to economic growth despite emerging price pressures.
Headline inflation rose to 2% year-on-year in January from 1.8% in December, while core inflation increased to 2.8%, signaling gradual demand normalization as economic activity improves.
Both figures remain within the BSP’s 3% ±1 percentage point target band.
Metrobank said the modest uptick in inflation was driven mainly by higher housing, utility, and fuel costs, reflecting annual rental adjustments outside Metro Manila and increased electricity rates.
Meanwhile, food inflation slowed to 1.1%, supported by broad-based price declines and continued rice deflation, helping keep overall inflation well anchored.
“Inflation is moving higher from recent lows but remains firmly within the central bank’s target, giving policymakers room to support growth,” Metrobank said.
For 2026, Metrobank maintained its inflation forecast at 3.3%, citing low base effects and recovering demand that could push prices higher in the second half of the year.
These pressures are expected to be partly offset by softer consumer spending and supply-side factors, including the lifting of the rice import ban.
Given the current inflation backdrop, Metrobank expects the BSP to deliver a cumulative 50 basis points in policy rate cuts in 2026, potentially bringing the reverse repurchase (RRP) rate down to 4% by year-end.
The bank added that, in the absence of major supply shocks, a measured and data-driven policy approach would allow the economy to gain momentum without reigniting excessive price pressures.
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