INFRASTRUCTURE SECTOR ANALYSTS assessed by the Bangko Sentral ng Pilipinas (BSP) is still waiting for a headinflation to stay within target band of 2-4% until 2026.
In its Monetary Policy report from its October meeting, the central bank said the econoinflation expectations “restrong solid.”
The BSP survey of foreign forecasts for October showed that the average infdecline forecasts for 2024 and 2026 were unchanged at 3.4% and 3.2%, respectively, compared to September forecasts.
Meanwhile, the mean infthe economic forecast for 2025 was reduced to 3% from 3.1% previously.
“Analysts view the risks of inflation as a broad estimate, with the headlinefthe economy is expected to remain low and within the target over the policy horizon,” said the BSP.
Basic forecasts of BSP are observedfit fell by 3.1% this year, 3.2% in 2025 and 3.4% in 2026.
Inflation rose to 2.3% in October, bringing the 10-month average to 3.3%.
The central bank said the balance of risks to inflation rates for 2025 and 2026 has shifted upwards but is likely to remain within target.
“Come infit is expected to settle near the lower part of the target band due to the effect of reduced valueffs for the purchase of rice from other countries,” said.
Executive order reducing tariffs on rice sales at 15% from 35% until 2028 took iefcomplete in July.
“However, in the second half of 2025, inflation may increase towards the end of the target rate, mainly due to the positive base of e.fresults,” he added.
It also noted that the risks are mainly due to “possible adjustments in electricity prices and higher minimum wages in regions outside Metro Manila.”
“Currently, downside risks continue to be linked to the impact of low import tariffs on rice,” the central bank said.
“However, after factoring in the impact of these risks on their assigned probabilities, risk-adjusted inflation forecasts remain within the target range of 2-4% over the policy horizon.”
BSP said infthe state of the economy and expectations of inflation allow it to adopt a “slightly restrictive monetary policy” stance.
“Nevertheless, the financial authorities will continue to carefully monitor emerging risks.”frelationship, including geopolitical factors.”
The Monetary Board is scheduled to hold its final policy review for the year on Dec. 19. BSP Governor Eli M. Remolona, Jr. said it is possible to bring a 25 basis point (bp) rate cut in the meeting.
The central bank has cut interest rates by a total of 50 bps since August or when the BSP started its rate-cutting cycle.
GROWING UP
Meanwhile, the BSP expects gross domestic product (GDP) growth to remain strong.
“The Monetary Board also expects the growth of the country’s economy to continue to be strong,” he said.
“This reflects improved prospects for income and household consumption, investment, and government spending, supported by the start of the fiscal tightening cycle in August and the announced reduction in demand in October.”
In the nine-month period, GDP reached 5.8%. To meet the lower end of the government’s target of 6-7%, the economy must grow by at least 6.5% in the fourth quarter.
“This view is supported by the reduction of the policy interest rate in August and the reduction of the requirements set in October,” said the BSP.
“The forecast is consistent with a small negative output gap in 2024 and 2025, which is expected to be positive in 2026. Continued growth in the output gap reflects improved opportunities for household consumption, investment, and government spending.” – Luisa Maria Jacinta C. Jocson
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