Inflation is expected to stay within the Bangko Sentral ng Pilipinas’ target in February, but base effects and sticky food prices could constrain further rate cuts, Metropolitan Bank & Trust Co. said.
The Ty-led lender sees headline inflation at 2.4% this month, within the central bank’s 2%–4% target band. However, it warned that emerging price pressures may steepen the bond yield curve and test the scope of the easing cycle.
The BSP delivered another rate cut this month, though Metrobank said monetary easing has yet to fully transmit to the economy, with price dynamics still largely shaped by supply-side shifts in agriculture.
Rice deflation slowed to single digits in January after a four-month import ban disrupted supply. While imports were later allowed, shipment delays kept prices firm into early February.
Onion prices, by contrast, could ease as the March harvest nears, despite disputes between farmer groups and the Department of Agriculture over import volumes.
Metrobank flagged vegetables, fruits and seafood — partly due to low base effects — along with electricity rates in parts of Mindanao and the Visayas and rising rents as upside risks.
Pork prices, amid recovering hog production, and fuel costs, which remain lower year-on-year despite recent monthly increases, may help cap inflation.
A rebound in inflation driven by base effects could prompt the BSP to limit further easing, the bank said.
“Faster inflation could mean the BSP may need to refrain from cutting rates too deeply,” Metrobank said, adding that a more hawkish stance would provide underlying support for the peso.
