By the staff
Metropolitan Bank & Trust Co. (Metrobank) expects the Bangko Sentral ng Pilipinas (BSP) to extend its easing cycle this year, forecasting a cumulative 50-basis-point cut to the policy rate as inflation stays firmly within target.
The Ty-led lender sees the benchmark reverse repurchase (RRP) rate falling to 4% by year-end, despite headline inflation edging up to 2% in January from 1.8% in December—still at the lower bound of the BSP’s 2%–4% target range.
“While inflation has risen from recent lows, it remains well anchored,” Metrobank said. “This gives the central bank room to support growth, even as demand-side pressures gradually re-emerge.”
January price pressures were driven mainly by higher utility costs, with Metrobank pointing to increases in housing, water, electricity, and gas—reflecting rental adjustments outside Metro Manila and elevated power rates.
Those pressures were partly offset by softer food prices. Food inflation eased to 1.1%, supported by continued rice deflation, a trend Metrobank expects to persist following the lifting of import restrictions.
The bank kept its full-year inflation forecast at 3.3%.
Metrobank cautioned that low base effects and recovering demand could push inflation higher in the second half of 2026, although weaker consumer spending may limit the upside.
Core inflation, which strips out food and energy, rose to 2.8% in January, signaling a gradual normalization in demand as the economy recovers.
Absent major supply-side shocks, Metrobank expects the BSP to remain measured and data-driven, easing policy while avoiding a resurgence in price pressures.
