Forecast Update: Inflation paths, rate cuts, and the dollar’s U-turn 

With tariffs and counter tariffs continuing to stir markets, investors wonder about the repercussions.

Here is what we think will happen:

Philippine inflation will cool.

We have revised our 2025 full-year average inflation forecast to 2.6% from the previous 3.0% due to the downward pressure exerted by food commodities and global oil prices. Lower oil prices are driven by weak global demand due to a bleak global economic outlook.

US President Donald Trump’s blanket tariffs remain an upside risk to inflation. However, the 90-day reprieve on the implementation of the higher tariffs on some countries, including the 17% for the Philippines, provides space for negotiation with the US to lower the top-up tariff.

Nonetheless, these blanket tariffs could still contribute a pass-through effect on do