MORE expensive rice and fuel may have increased the country’s inflation rate in September and could prompt the Bangko Sentral ng Pilipinas (BSP) to hit the brakes on its monetary policy easing this week.
This was according to ANZ Research, which said the country’s September inflation print could increase to 2.1 percent. While this is still within the BSP’s 2 to 4 percent inflation target, this is significantly higher than the 1.5 percent posted in August and 1.9 percent recorded in September 2024.
Given this, ANZ Research said this could prevent the Monetary Board from reducing policy rates further. This means the country’s key interest rates could stay at 5 percent.
‘The BSP has so far lowered rates by a cumulative 150 bp [basis point] in the current cutting cycle. At its last meeting, the central bank characterized the current policy rate as appropriate given manageable inflation and output near potential,’ ANZ Research said.
‘However, real rates remain restrictive amid subdued inflation. We think that the BSP will wait for the Q3 [third quarter] GDP data, out in November, before cutting rates by another 25 bp in December,’ it added.
ANZ Research said, however, noted that while key policy rates have been reduced by 150 bps, it has not translated into lower interest rates for local Filipinos.
Citing BSP data, ANZ Research said, non-performing loans remained above prepandemic levels. Consumer loans in Asian countries like the Philippines still account for 22-29 percent of total loans.
‘In these economies, sustained stress in this segment is likely dampening monetary policy transmission, particularly through the lending channel,’ ANZ Research said.
The think tank said lending standards in the Philippines have become more stringent. ANZ Research said ‘banks in both economies [India and the Philippines] are surprisingly cautiously optimistic about a recovery in demand for loans.’
Earlier, the BSP reported that loans extended by Universal and Commercial Banks (UKBs) posted their slowest growth in nine months.
BSP data showed loans from UKBs grew 11.2 percent in August 2025, the slowest since the 11.1 percent posted in November 2024. In April 2025, these loans also grew 11.2 percent.
The data showed that after adjusting for seasonal fluctuations, outstanding UKB loans increased by 0.4 percent month-on-month in August.