Philippines: BSP policy outlook shifts – Standard Chartered

Standard Chartered’s Jonathan Koh and Edward Lee now expect Bangko Sentral ng Pilipinas (BSP) to keep its policy rate unchanged at the 27 August meeting, abandoning a previously projected hike. The bank trims its 2026 Gross Domestic Product (GDP) growth forecast to 3.5% and lowers Consumer Price Index (CPI) expectations, while still projecting rate cuts in 2027 once inflation falls below 4%. BSP rhetoric is expected to stay hawkish.

BSP seen on hold but still hawkish

"We now expect Bangko Sentral ng Pilipinas (BSP) to keep its policy rate unchanged at its 27 August meeting, versus our previous forecast of a 25bps hike."

"We maintain our view of 25bps of rate cuts in Q2-2027 and Q3-2027 once inflation moderates to below 4% in Q2-2027."

"Consequently, we lower our end-2026 and end-2027 policy rate forecasts to 4.75% (5% prior) and 4.25% (4.5% prior), respectively."

"We lower our 2026 GDP growth forecast to 3.5% (4.0% prior) on softer-than-expected growth in H1."

"We also revise down our 2026 CPI inflation forecast to 5.9% (6.5% prior) on lower-than-expected inflation to date."