Analysts see BSP pause in October

The Bangko Sentral ng Pilipinas (BSP) may hold off further monetary easing in October after inflation rose to a five-month high in August, with analysts expecting the central bank to deliver its last interest rate cut for the year in December.

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Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said it would be difficult for the BSP to justify another reduction in borrowing costs next month given the rebound in price pressures.

“Given the upside surprise in headline and core inflation, a rate cut in October looks unlikely,” Mr. Asuncion said in an emailed reply to questions. “It is difficult to justify a BSP rate cut as both cyclical and structural inflation measures tilt upward.”

Security Bank Chief Economist Angelo B. Taningco said the Monetary Board would likely pause in October “in light of the rising inflationary pressures.” “However, we still maintain our view for the BSP to conduct its fourth 25-basis-point (bp) rate cut for the year in December,” he said in an email.

Headline inflation quickened to 1.5% in August from 0.9% in July, mainly due to typhoon-driven spikes in vegetable and fish prices. It was faster than market expectations but slower than 3.3% a year earlier.

The August rate fell within the BSP’s 1-1.8% forecast but exceeded the 1.3% median estimate in a BusinessWorld poll of 16 analysts. It also marked the sixth straight month that inflation remained below the BSP’s 2-4% target.

For the first eight months, inflation averaged 1.7%, matching the central bank’s 2025 forecast.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said the August outcome would weigh heavily on the BSP’s next policy move.