Inflation in the Philippines started 2026 firmly within the Bangko Sentral ng Pilipinas’ (BSP) target, keeping the door open for further interest rate cuts, Metropolitan Bank & Trust Co. (Metrobank) said.
Headline inflation rose slightly to 2 percent in January from 1.8 percent in December, still inside the BSP’s 3 ± 1 percent target range. Core inflation, which excludes volatile food and energy prices, edged up to 2.8 percent, suggesting the economy is gradually returning to normal demand levels.
Metrobank noted that price increases mainly came from housing, utilities, and fuel, while food prices eased to 1.1 percent, aided by falling rice costs. “Inflation remains well-anchored within the central bank’s target, giving policymakers room to support growth,” the bank said.
The bank expects 2026 inflation to average 3.3 percent, with rising demand later in the year potentially pushing prices up, partially offset by softer spending and measures like lifting the rice import ban.
Against this backdrop, Metrobank forecasts the BSP will likely cut rates by a cumulative 50 basis points in 2026, lowering the reverse repurchase (RRP) rate to 4 percent by year-end. For businesses and households, this could mean cheaper borrowing costs, easier access to credit, and continued support for economic activity, as long as major price shocks are avoided.
