Metropolitan Bank & Trust Co. (Metrobank) sees room for the Bangko Sentral ng Pilipinas (BSP) to lower interest rates this year, as inflation remains within the central bank’s target. This could help the economy grow, even with some rising prices.
Philippine inflation grew to 2% in January from 1.8% in December, still within the BSP’s 3±1% target. Core inflation, which excludes food and energy, went up to 2.8%, showing early signs that demand is picking up.
Metrobank said higher costs for housing, water, electricity, gas, and other fuels pushed prices up, while food prices stayed low, helped by cheaper rice and other items.
“While inflation is moving higher from recent lows, it remains well-anchored within the central bank’s target,” Metrobank said in a statement. “This gives policymakers room to continue supporting growth, even as demand-side pressures gradually build.”
The bank expects overall inflation to reach 3.3% this year, as demand picks up later in 2026. Slower consumer spending and lifted rice import restrictions may help keep prices from increasing too fast.
Metrobank predicts the BSP will cut rates by a total of 0.5 percentage points this year, bringing the main interest rate to 4% by December. The bank said this approach balances support for growth while keeping prices stable.