The Philippine economy is showing signs of stabilization, with headline inflation settling at 3.7% year-on-year in June, within the central bank’s target range. We forecast full-year inflation at 3.3%, prompted by expectations of monetary policy easing.

We foresee the Bangko Sentral ng Pilipinas (BSP) implementing three 25-basis point rate cuts in August, October, and December, bringing the policy rate down to 5.75% by year-end. This shift comes as BSP Governor Eli Remolona signals a more dovish stance, emphasizing the need for timely action to prevent output loss.

In light of these developments, the Philippine peso is expected to strengthen in the fourth quarter, potentially reaching 57.2 against the US dollar by year-end. We also note that the Bureau of the Treasury has increased its bor