The Bangko Sentral ng Pilipinas (BSP) expects inflation to remain manageable and stay at the lower end of its 2–4 percent target band for the rest of the year, aided by the continued softening of rice prices.
For 2026 and 2027, the BSP projects slightly higher inflation, but still “firmly” within target.
Interventions taking effect
Meanwhile, Economic Planning Secretary Arsenio Balisacan said the steady drop in rice prices and easing inflation among low-income households signal that government interventions are taking effect.
“These are clear signs that our measures are working. They help preserve the value of the peso for Filipinos and give businesses and consumers greater confidence to plan ahead,” Balisacan said on Tuesday.
He added that inflation in the next five months is likely to remain “favorable and supportive of domestic demand,” but warned of external risks, including shifts in global policy and rising geopolitical tensions.
The below-target inflation rate gives
the BSP room to pursue further monetary easing. The central bank expects full-year inflation to average 1.6 percent in 2025 and 3.4 percent in 2026.
The July inflation print came in at 0.9 percent, aligning with the BSP’s forecast range of 0.5 percent to 1.3 percent for the month.
At its June 19 policy meeting, the BSP cut its key policy rate by 25 basis points to 5.25 percent, citing a benign inflation environment.
Governor Eli Remolona Jr. has since signaled room for a further 50 bps in rate cuts over the remaining period of the year, which could bring the policy rate below 5 percent by end-2025.
A rate cut could come as early as the next Monetary Board meeting on August 28.
