Citi expects the Bangko Sentral ng Pilipinas (BSP) to resume its monetary easing in April 2025 after inflation rate eased to a five-year low of 1.8 percent in March.
Nalin Chutchotitham, Citi economist for the Philippines and Thailand said that with the March inflation falling within the BSP’s forecast of 1.7 percent to 2.5 percent for the month, “we expect cuts to resume in April, August and December and see risks of the latter two cuts being brought forward to June and October, respectively, given external headwinds.”
Chutchotitham said inflation may creep higher in April, but staying firmly in the lower half of the BSP’s target range for the rest of 2025. Citi expects inflation to average 2.2 percent in 2025 and 3.2 percent in 2026.
“The modest upward trajectory that we forecast for the rest of 2025 largely reflects base effects from sequential softening in rice and energy prices between April and December’24, even as we expect inflation momentum to remain subdued,” the US bank said.
Citi said domestic demand indicators remained resilient, with bank loan growth still strong at 12.2 percent year-on-year in February, while consumption was supported by near-trend growth of remittances.
“While construction investments could slow temporarily ahead of the general elections in May, consumer spending could be supported by disinflation, but could still benefit from easier financial conditions, in our view,” it said.