PHP: Inflation shock drives hawkish BSP path – UOB

FXStreet Insights Team FXStreet

UOB economists Julia Goh and Loke Siew Ting highlight that Philippine inflation has surged to a 37‑month high, forcing a sharp upward revision to the 2026 forecast. They now expect the central bank of the Philippines, Bangko Sentral ng Pilipinas (BSP) to deliver two further 25 bps hikes, taking the Reverse Repurchase (RRP) rate to 5.00% and holding it there through end‑2026.

Surging CPI cements further BSP hikes

"Ongoing Middle East-related energy supply disruptions, compounded by base effects and continued PHP weakness, could drive inflation toward—or above—10% by year-end if the conflict persists."

"The sharper-than-expected jump in Apr inflation has forced us to revise our full-year 2026 inflation forecast upward again to 7.5% (from 5.5% revised in Apr; BSP est: 6.3%; 2025: 1.7%), marking the highest annual rate since 2008."

"Overall, the latest inflation data reinforces our view that two additional 25bps hikes in the target reverse repurchase (RRP) rate—one in Jun and another in 3Q26—are warranted to contain inflationary pressures while remaining supportive of medium-term growth amid ongoing fiscal support."

"This would lift the RRP rate to 5.00%, which we expect to be maintained through end-2026."

"Our outlook is consistent with the BSP’s hawkish Apr Monetary Policy Statement and the Governor’s guidance highlighting a measured, data-dependent approach amid lingering Middle East-related uncertainties."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.