Metrobank sees rate cuts and growing long-term yields in 2026

Metropolitan Bank & Trust Company (Metrobank), a universal bank, expects a pickup in economic activity in 2026, driven by the return of public construction and the delayed impact of monetary easing. The outlook was presented by Nicholas Mapa, chief economist of Metrobank, during the bank’s 2025 Market Movers series.

Mapa said these factors form part of five key themes that will shape the country’s economic path. He noted that potential rate cuts by the Bangko Sentral ng Pilipinas (BSP) as early as December and a steeper yield curve could reflect expectations of improving growth momentum next year.

The briefing, held for Metrobank’s Private Wealth and corporate clients, also featured research from CreditSights and BMI, both under Fitch. The event carried the theme “Trump, Tariffs, and the Terminal Rate: The New Global Order.”

Here are Metrobank’s five calls on the Philippine economy for 2026:

1. Philippine GDP growth
   The temporary fiscal slowdown this year may weigh on growth in the near term. Metrobank expects activity to gradually recover in 2026 as capital formation and investments improve.
2. Inflation
   Inflation is projected to grow in 2026 and approach the BSP’s 4% upper target band by mid-year. Mapa said this will be driven by base effects and possibly higher global commodity prices. “Average full-year inflation is still expected to remain within the BSP’s 2-4% target,” he said.
3. BSP policy rates
   The BSP is expected to take a dovish stance after the possible rate cut in December, even with inflation seen moving close to 4% by mid-2026. The central bank has cut a total of 175 basis points from its 6.50% peak, bringing the benchmark policy rate to 4.75% after its Oct. 9 meeting. “With the price stability mandate still within reach, BSP will likely stay focused on supporting sagging growth momentum,” Mapa said.
4. Yield curve
   The yield curve is expected to steepen as BSP rate cuts help keep short-term rates lower. Long-term yields may move higher as the government continues issuing longer-term debt and as inflation gradually rises. Expectations of more rate cuts could further pull down short-term yields.
5. The peso
   Mapa said the weak dollar trend may continue next year as the US Federal Reserve maintains its rate-cutting cycle. “Philippine-specific factors however should translate to sustained pressure on the peso as the economy is slated to run a current account deficit in 2026 and 2027,” he said.