Easing global oil prices could provide the Philippines with a timely economic tailwind, strengthening the peso, improving financial conditions and giving the Bangko Sentral ng Pilipinas (BSP) greater scope to ease monetary policy, according to Manulife Investment Management.
Murray Collis, Head of Asia Fixed Income at Manulife Investment Management, said the outlook for Philippine financial markets in the second half of 2026 will hinge largely on two external forces: the trajectory of global oil prices and the U.S. Federal Reserve’s expected gradual interest rate cuts.
“Key drivers for markets, including the Philippines, remain the global backdrop and our expectation that the Federal Reserve will move gradually. If oil prices stabilize or even ease from here, that would support Philippine bonds, the peso, and overall financial conditions,” Collis said during a briefing on July 14.
Lower energy prices would also help keep inflation in check, potentially giving the BSP more flexibility to shift toward a more neutral policy stance after maintaining a cautious approach amid geopolitical uncertainties.
“If we see oil start to roll over, it would give the BSP a little bit more ability to move to a more neutral stance. However, if oil prices rise again, we would expect the BSP to maintain a hawkish bias,” he said.
The assessment comes as investors weigh whether easing inflation will allow central banks across Asia to gradually pivot toward monetary easing without reigniting price pressures.
Manulife said Asia’s fixed-income markets remain attractive, offering relatively higher yields and shorter duration than many developed markets despite persistent geopolitical risks.
For the Philippines, the investment manager sees local bonds benefiting from a combination of moderating inflation, a firmer peso and improving financial conditions, provided oil prices remain contained and global shocks do not escalate.
The outlook underscores how closely the country’s monetary policy remains tied to developments beyond its borders, with movements in global energy markets likely to shape not only inflation but also the timing and pace of future BSP policy adjustments.
