Inflation may ease in 2025, 2026 – economists
![Inflation may ease in 2025, 2026 � economists](https://media.philstar.com/photos/2024/07/26/3_2024-07-26_19-17-48.jpg)
MANILA, Philippines — Private sector economists and external analysts cut their inflation forecasts for 2025 and 2026, with the rate expected to stay within the two to four percent target range of the Bangko Sentral ng Pilipinas (BSP) in the next three years amid easing price pressures.
In the highlights of the Monetary Board’s meeting held on June 27, the BSP said inflation expectations for 2025 to 2026 have eased further toward the midpoint of the target range.
This developed as the results of the central bank’s survey of external forecasters for June showed a lower inflation forecast for 2025 at 3.4 percent from 3.5 percent in the May survey.
Inflation expectations also went down to 3.3 percent for 2026 from 3.4 percent previously.
Meanwhile, the mean inflation forecast for 2024 was maintained at 3.7 percent this year, staying near the upper end of the two to four percent target range.
“Analysts expect within-target inflation over the policy horizon, although upside risks continue to dominate their outlook owing to supply-side pressures and potential second-round effects,” the BSP said.
Headline inflation eased to a four-month low of 3.7 percent in June from 3.9 percent in May. Average inflation stood at 3.5 percent in the first half.
The BSP has been keeping borrowing costs unchanged since it delivered its aggressive 450-basis-point hikes from May 2022 to October 2023, which brought the key interest rate to a 17-year high of 6.50 percent.
According to the BSP, price pressures are expected to further ease in the near term following the implementation of reduced tariffs on rice, along with other non-monetary interventions that could ensure sufficient domestic food supply.
“If sustained, an improvement in inflation outlook would allow the Monetary Board to consider a less restrictive monetary policy stance,” the BSP said.
While the BSP projects inflation to breach the two to four target range in July due to base effects, it is expected to return to within the target by August.
However, upside pressures may still emanate from higher prices of food items other than rice, transport charges and electricity rates, it said.
BSP Governor Eli Remolona Jr. said there is more scope for policy easing in August due to the better-than-expected inflation print in June. He hinted at the possibility of a 25-basis-point cut at the Monetary Board’s next meeting on Aug. 15.
He had also said the current restrictive rate environment could “overdo” in quelling demand.
In its highlights of the meeting, the BSP said domestic growth prospects of the economy remain intact for 2024 and 2025.
However, gross domestic product may decelerate in the second half due to the BSP’s tightening cycle.
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