Analysts expect the Bangko Sentral ng Pilipinas (BSP) to deliver additional rate hikes in the coming months after kicking off a new tightening cycle, as inflation risks remain elevated and increasingly broad-based.
Citi said the central bank’s 25-basis-point (bp) hike to 4.5 percent is unlikely to be a one-off move, with a follow-up increase already penciled in for the next policy meeting.
‘Following BSP’s 25-bp policy rate hike to 4.5 percent in April, we now add to our base case a follow-up 25-bp hike in June, before pausing,’ Citi said.
The global bank said that risks are tilted toward further tightening beyond June, noting that ‘the balance of risks is higher for an additional 25-bp hike in August, compared to a pause after June.’
Citi said the BSP’s latest move reflects growing concerns over the spillover of supply shocks into broader inflation, particularly as higher energy costs filter through to transport and food prices. The hike was also aimed at preventing a de-anchoring of inflation expectations.
Despite the tightening bias, Citi noted that the BSP is likely to proceed cautiously, emphasizing gradual adjustments to avoid undermining economic growth.
‘We sense that the BSP move was not meant to be a one-off, though there was also an apparent emphasis on gradualism,’ it said, citing signals that the central bank will ‘proceed in steps’ and ‘won’t make very large moves.’
Similarly, ING said the BSP’s rate hike marks the start of a new tightening cycle as it seeks to reassert control over inflation amid rising oil prices and geopolitical risks.
In a report, Deepali Bhargava, ING regional head of research at Asia-Pacific noted that inflation pressures are becoming more entrenched, driven by rising transport costs and fertilizer prices, which are feeding into broader price increases.
With inflation forecasts revised higher to 6.3 percent in 2026 and 4.3 percent in 2027, both above the target range, Bhargava expects further tightening ahead.
‘We now expect an additional 50 bps of hikes in 2026, assuming material de escalation in the US-Iran conflict by the end of second quarter,’ she said, adding that the BSP is likely to move in a ‘front loaded but measured manner.’
‘However, should disruptions persist, and Brent prices remain above $100 per barrel for most of 2026, a deeper and more aggressive hiking cycle would likely follow,’ she said.
For its part, Manulife Investment Management said the central bank’s latest move is a preemptive step to prevent inflation from becoming more persistent.
Jean de Castro, head of fixed income at Manulife Investment, said the rate hike signals tighter financial conditions ahead, with higher borrowing costs and a more cautious credit cycle likely to follow.
‘A single 25-bp hike is unlikely to quickly pull inflation back into target… and BSP indicated that further hikes are part of the calculation with the pace being largely data dependent,’ she said.
She added that market pricing suggests a ‘higher-for-longer rate environment,’ but not an uncontrolled inflation spiral, with bond yields reflecting elevated risks tied to oil price uncertainty.
Taken together, analysts said the BSP’s latest move underscores a clear policy shift toward tightening, even as the central bank seeks to balance inflation control with the need to support economic growth.
The Monetary Board will next meet on June 18 and is widely expected to continue adjusting rates in measured steps, with the path ultimately hinging on how global oil prices evolve and whether second-round effects take hold in the coming months.