Tertius News is an AI-native newsroom: an AI model reads the linked source articles below and extracts what each outlet reported, so you can compare their coverage side by side. How this works →

Philippines central bank signals more rate hikes as inflation risks persist

The Bangko Sentral ng Pilipinas raised its benchmark rate to 5.0% and signaled further tightening, with ING expecting another 25bp hike in Q4 2026 due to sustained inflation risks. Core inflation eased but remains above target, and the BSP lifted its 2027 inflation forecast on wage pressures.

By Tertius News AI Desk 2 outlets · 2 distinct · 2 articles Version 1 Coverage Aug 27–28, 2026 Published 3h ago

BSP Hikes Rate to 5.0%, Signals Further Tightening

The Bangko Sentral ng Pilipinas (BSP) raised its target reverse repurchase rate by 25 basis points to 5.0%, a move that was in line with market expectations. The decision reflects the central bank's assessment that inflation risks remain tilted to the upside, with price pressures likely to keep inflation above target in 2026 and 2027.

The tone of the policy statement was relatively hawkish, as the BSP upgraded its 2027 inflation forecast while expressing less concern about growth. This reinforces its commitment to keeping inflation expectations anchored.

Inflation Forecasts Revised

The BSP lowered its 2026 inflation forecast to 6.1% from 6.4%, reflecting the benefit of lower oil prices. However, this was partly offset by rising risks associated with El Niño, particularly through higher rice prices. The central bank's baseline forecast assumes a severe El Niño scenario, incorporating weaker domestic rice production and higher import prices.

Inflation risks remain firmly on the upside, with El Niño-related food inflation and larger-than-expected wage increases identified as key drivers. In particular, the BSP raised its 2027 inflation forecast to 5.4%, reflecting concerns that the recently announced 12% minimum wage increase—well above the 6% assumption used in the previous Monetary Policy Report—will generate more persistent inflation pressures.

The central bank views wage growth as a significant inflation risk under most scenarios considered. Given the lagged nature of wage pass-through, the full impact is expected to be felt more strongly in 2027. As a result, inflation is not expected to return to target until 2028, when it is forecast to average 3.3%. The BSP also warned that inflation could rise sharply and potentially peak at elevated levels in the fourth quarter of 2026 before gradually easing thereafter.

Growth Outlook and Policy Stance

On growth, Governor Eli Remolona acknowledged that economic activity has been weaker than expected but remained confident that growth will recover more meaningfully in 2027. He argued that the current monetary policy stance is not constraining activity, noting that the real policy rate is only around 1.75%.

Remolona stressed that the BSP's mandate is price stability and that monetary policy has limited scope to directly support growth. Real policy rates are now close to historical lows, while interest rate differentials between the Philippines and the US have narrowed significantly.

ING Expects Additional Hike in Q4 2026

ING Groep NV expects the BSP to deliver another 25-basis-point increase in key borrowing costs during the fourth quarter of 2026, according to Deepali Bhargava, ING regional head of research for Asia-Pacific. Persistent risks keep the policy outlook hawkish, she said.

“We continue to expect another 25 basis points (bps) rate hike in the fourth quarter of 2026 as policymakers remain focused on inflation risks until core inflation shows clear signs of moderation,” Bhargava said.

ING’s outlook comes on the heels of the BSP’s third consecutive quarter-point hike, which brought the benchmark rate to five percent from 4.75 percent.

“Uncertainty surrounding the severity and duration of El Niño, the persistence of higher oil prices, and the transmission of recent wage increases is unlikely to be fully resolved before then,” Bhargava said.

“More importantly, while these risks could keep headline inflation volatile over the coming months, we believe the BSP will be looking for convincing evidence that core inflation is decelerating before calling a peak in rates,” she added.

Core inflation stood at 4.2 percent in July, easing from a peak of 4.4 percent in June. However, this remains above the four percent target for both headline and core prints.

According to ING, core disinflation would provide greater confidence that second-round effects from food, energy, and wages are fading.

“Until that happens, the BSP is likely to maintain a hawkish bias and remain focused on ensuring that inflation expectations stay firmly anchored,” Bhargava said.

How each outlet told it

A framing line is our reading of that outlet's own text — an interpretation, not a quotation and not a fact we assert. Check it against what the outlet published.

Manila Bulletin as of Aug 28, 2026, 9:16 AM UTC

Framing: Our reading Peso pressures, core inflation may force BSP into rate hike in Q4 — neutral

Facts Included:

ING Groep NV expects the Bangko Sentral ng Pilipinas (BSP) to raise interest rates further in the fourth quarter unless underlying price pressures show a sustained slowing trend.
Deepali Bhargava, ING regional head of research for Asia-Pacific, said the Dutch lender expects the central bank’s Monetary Board to deliver another 25-basis-point increase in key borrowing costs during the final quarter.
ING's outlook comes on the heels of the BSP’s third consecutive quarter-point hike, which brought the benchmark rate to five percent from 4.75 percent.
Core inflation stood at 4.2 percent in July, easing from a peak of 4.4 percent in June, but remains above the four percent target.
During its latest policy meeting, the BSP tweaked its 2026 average inflation forecast lower to 6.1 percent from 6.4 percent; for 2027, it raised the forecast to 5.4 percent from 4.5 percent.
BSP Governor Eli M. Remolona Jr. argued that “the current monetary policy stance is not constraining activity,” pointing to a real policy rate of around 1.75 percent.
United Overseas Bank (UOB) senior economist Julia Goh and economist Loke Siew Ting noted that interest rates are approaching “sufficiently restrictive territory,” and UOB expects the BSP “to stay on hold” following its latest move, keeping the rate at 5 percent through 2027.
Citi sees a higher likelihood of central bank action, warning that “the probability of inflation surprises materializing ahead of the Dec. 17 meeting...is more significant,” implying another quarter-point hike could occur, with the terminal rate possibly peaking and holding at 5.25 percent.

Read the source article →

ING Think as of Aug 27, 2026, 11:16 AM UTC

Framing: Our reading Highlights the central bank's hawkish stance amid elevated inflation risks — analytical

Facts Included:

The Bangko Sentral ng Pilipinas (BSP) raised the target reverse repurchase (RRP) rate today by 25bp to 5.0%.
The decision reflects the central bank's assessment that inflation risks remain skewed to the upside.
The BSP upgraded its 2027 inflation forecast.
The BSP lowered its 2026 inflation forecast to 6.1% from 6.4%.
The BSP's baseline forecast assumes a severe El Niño scenario.
The BSP raised its 2027 inflation forecast to 5.4%.
Inflation is not expected to return to target until 2028, when it is forecast to average 3.3%.
Governor Eli Remolona acknowledged that economic activity has been weaker than expected.
Remolona argued that the current monetary policy stance is not constraining activity, noting that the real policy rate is only around 1.75%.
Remolona stressed that the BSP's mandate is price stability and that monetary policy has limited scope to directly support growth.
The BSP expects one additional 25bp rate hike in 4Q26.
Real policy rates are now close to historical lows, while interest rate differentials between the Philippines and the US have narrowed significantly.

Read the source article →

Transparency & Audit Trail

2 outlets · 2 distinct · 2 articles consulted: Manila Bulletin, ING Think Version 1 Written 2026-08-28