BSP Update: First rate hike likely in June 

The Bangko Sentral ng Pilipinas (BSP) held an off-cycle Monetary Board (MB) meeting on March 26, 2026, and decided to maintain its policy rate at 4.25%.

Key points

• According to BSP chief Eli Remolona Jr., the fast-changing and uncertain environment amid ongoing geopolitical conflict warranted an off-cycle meeting.
  
• Considering global price pressures, the BSP revised its inflation forecast for full year 2026 to 5.1% and for full year 2027 to 3.8%.
• The BSP chief noted that price pressure arises from supply-side shocks, where the “potency of monetary policy remains limited.”
• Remolona also said that delivering a rate hike at this time could be harmful to economic growth. 

What now?

• Metrobank maintains its view that full year inflation in 2026 will breach the BSP’s 2%-4% target for the period, in line with the BSP’s latest forecast.
• We also maintain our forecast that the BSP will hike by a cumulative 50 basis points this year, bringing the target RRP to 4.75% by year-end. 
• It may be wise to track opportunities to buy dollars, given the expectations for the dollar-peso spot rate to tick higher. Meanwhile, with the rising inflation expectations, the Philippine yield curve is expected to steepen further.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)     

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ECONOMIC UPDATES   

Policy Rate Updates: Policy rate updates to reassure 

The central bank may deliver the first rate hike in June

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