T&S Asset Management
Listen日本語

BMI and Citi see the BSP's policy rate peaking at 5.75%–6.0% after October hike

Published Data as of PhilippinesMacro & households
Listen0:00

A one-minute summary read by an AI voice.

Key points

Implications for lenders

With forecasters expecting the policy rate to rise from 5.50% towards 5.75%–6.0%, lenders may want to price new fixed-rate loans and set funding terms for a further increase rather than for early cuts. Slower growth, such as Deutsche Bank's 2.9% forecast, can weaken borrowers' income, so affordability checks and early-arrears monitoring for unsecured loans can be tightened.

Implications

ExecutivesPlans for 2027 can assume funding costs stay high at least into the first quarter, with the size of any further increase still open.
InvestorsForecasters differ on the peak rate but agree on slower growth, which matters more for consumer-loan quality than the last quarter point.
OperatorsVariable-rate borrowers and households hit by fuel and food prices are the groups to monitor first as rates and prices stay high.

Facts

BMI: in a note reported on 24 October, BMI (Fitch Solutions) said it expects the BSP to raise rates by 25 basis points in December, 1 leaving the policy rate at 5.75% at end-2026, up from BMI's earlier forecast of 5.50%. 2 It expects no further increases after December because slow growth limits room to tighten, and sees the rate at 5.25% by end-2027, after cumulative cuts of 50 basis points during 2027. 3 BMI forecasts inflation of 5.9% in 2026 (against the BSP's 6.1%) 4 and 5.4% in 2027 (against the BSP's 6.0%), 5 and growth of 4.5% in 2027, below the government's 5–6% target. 6

Citi: in comments over the weekend of 24–25 October, Citi said it expects the rate to reach 6.0%, via increases of 25 basis points in December 2026 and early 2027, 7 citing elevated fuel prices that it expects to broaden inflation into early 2027. It expects inflation to peak around April and no increases beyond February. Citi calculates that a rate of 6.0% would be about 1.3 percentage points above the average of the BSP's 2027 and 2028 inflation forecasts, and about 2.7 points above the BSP's 2028 forecast. 8

Deutsche Bank: in commentary on 26 October, Deutsche Bank said it expects an increase of 25 basis points at the BSP's February 2027 meeting, with a possible pause in December, 9 and that the cycle may not be over if January 2027 inflation confirms the expected acceleration. It forecasts inflation of 5.7% in 2026 10 and 4.2% in 2027, 11 and cut its growth forecasts to 2.9% for 2026 (cut from 3.5%) 12 and 5% for 2027 (cut from 5.8%). 13

BSP: on 22 October the BSP raised its target reverse repurchase rate to 5.50%, 14 kept its 2026 inflation forecast at 6.1% 15 and raised its 2027 forecast to 6.0%. 16 Its next meeting is on 17 December.

Analysis

Time series: the policy rate stood at 5.0% in September 17 and cumulative increases since April total 125 basis points. 18 The three forecasters agree that at least one more increase is likely and differ mainly on how far the cycle runs: from 5.75% (BMI) to 6.0% (Citi). BMI's and Deutsche Bank's inflation forecasts for 2027, from 4.2% (Deutsche Bank) to 5.4% (BMI), are both below the BSP's own 6.0%, which leaves the BSP more hawkish on prices than these two forecasters.

Growth forecasts have moved down: the World Bank forecast 3.7% for 2026 in early October, 19 against Deutsche Bank's 2.9% now.

Region: Bank Indonesia held its rate at 5.75% on 21 October. 20 BMI's end-2026 forecast would bring the Philippine policy rate level with Indonesia's, and Citi's terminal rate would put it above, while Malaysia's policy rate stood at 2.75%. 21

Counterpoints and uncertainties

These are forecasts by three private forecasters reported in the press, not BSP guidance, and they disagree on timing: BMI sees easing towards the end of 2027 while Citi and Deutsche Bank see increases into early 2027. The path depends on El Niño's effect on food prices and on fuel prices; if growth weakens faster than expected, the BSP could stop earlier, as BMI expects. January 2027 inflation data, due before the February meeting, will test the forecasts.

Key figures

  1. BMI expected BSP increase in December 2026: 25 basis points. Size of the BSP rate increase BMI expects at the December 2026 meeting. Philippines, national. Basis date: 22 Oct 2026. Source: The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  2. BMI forecast of BSP policy rate, end-2026: 5.75% (up from BMI's earlier forecast of 5.50%). BMI (Fitch Solutions) forecast of the BSP target reverse repurchase rate at end-2026. Philippines, national. Basis date: 22 Oct 2026. Source: The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  3. BMI forecast of BSP policy rate, end-2027: 5.25% (after cumulative cuts of 50 basis points during 2027). BMI (Fitch Solutions) forecast of the BSP target reverse repurchase rate at end-2027. Philippines, national. Basis date: 22 Oct 2026. Source: The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  4. BMI inflation forecast, 2026: 5.9% (against the BSP's 6.1%). BMI forecast of average CPI inflation in 2026. Philippines, national. Basis date: 22 Oct 2026. Source: The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  5. BMI inflation forecast, 2027: 5.4% (against the BSP's 6.0%). BMI forecast of average CPI inflation in 2027. Philippines, national. Basis date: 22 Oct 2026. Source: The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  6. BMI GDP growth forecast, 2027: 4.5% (below the government's 5–6% target). BMI forecast of real GDP growth in 2027. Philippines, national. Basis date: 22 Oct 2026. Source: The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  7. Citi forecast of BSP terminal policy rate: 6.0% (via increases of 25 basis points in December 2026 and early 2027). Citi forecast of the peak BSP target reverse repurchase rate in the current cycle. Philippines, national. Basis date: 25 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  8. Citi terminal rate vs BSP 2027–28 inflation forecasts: about 1.3 percentage points (and about 2.7 points above the BSP's 2028 forecast). Gap between Citi's 6.0% terminal rate and the average of BSP's 2027 and 2028 inflation forecasts, as calculated by Citi. Philippines, national. Basis date: 25 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  9. Deutsche Bank expected BSP increase in February 2027: 25 basis points (with a possible pause in December). Size of the BSP rate increase Deutsche Bank expects at the February 2027 meeting. Philippines, national. Basis date: 26 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  10. Deutsche Bank inflation forecast, 2026: 5.7%. Deutsche Bank forecast of average CPI inflation in 2026. Philippines, national. Basis date: 26 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  11. Deutsche Bank inflation forecast, 2027: 4.2%. Deutsche Bank forecast of average CPI inflation in 2027. Philippines, national. Basis date: 26 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  12. Deutsche Bank GDP growth forecast, 2026: 2.9% (cut from 3.5%). Deutsche Bank forecast of real GDP growth in 2026. Philippines, national. Basis date: 26 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  13. Deutsche Bank GDP growth forecast, 2027: 5% (cut from 5.8%). Deutsche Bank forecast of real GDP growth in 2027. Philippines, national. Basis date: 26 Oct 2026. Source: The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  14. BSP policy rate after the 22 October 2026 meeting: 5.50% (up from 5.0%). BSP target reverse repurchase (RRP) rate. Philippines, national. Basis date: 22 Oct 2026. Source: Philstar: Inflation risks prompt BSP to hike rates anew (2026-10-22)
  15. BSP inflation forecast for 2026 (October 2026): 6.1% (unchanged from the August forecast). BSP forecast of average annual CPI inflation, 2026, as presented on 22 October 2026. Philippines, national. Basis date: 22 Oct 2026. Source: Philstar: Inflation risks prompt BSP to hike rates anew (2026-10-22)
  16. BSP inflation forecast for 2027 (October 2026): 6.0% (up from 5.4% in August). BSP forecast of average annual CPI inflation, 2027, including the October rate increase. Philippines, national. Basis date: 22 Oct 2026. Source: Philstar: Inflation risks prompt BSP to hike rates anew (2026-10-22)
  17. BSP policy rate (as reported): 5.0% (unchanged since the 28 August 2026 increase from 4.75%). BSP overnight reverse repurchase rate as cited in press coverage. Philippines, national. Basis date: 9 Sep 2026. Source: Inquirer: Bad loans up amid continuing consumer strain (2026-09-09)
  18. Cumulative BSP rate increases since April 2026: 125 basis points (four straight increases; the three earlier moves were 25 basis points each). Total increase in the BSP target RRP rate from April to October 2026. Philippines, national. Basis date: 22 Oct 2026. Source: Philstar: Inflation risks prompt BSP to hike rates anew (2026-10-22)
  19. World Bank real GDP growth forecast, 2026: 3.7% (unchanged from the World Bank's August forecast). World Bank East Asia and Pacific Economic Update (October 2026) real GDP growth forecast. Philippines, national. Basis date: 6 Oct 2026. Source: Philstar: World Bank retains Philippines growth forecasts (2026-10-07)
  20. BI-Rate (October 2026 decision): 5.75% (unchanged from September). Bank Indonesia benchmark policy rate. Indonesia, national. Basis date: 21 Oct 2026. Source: Bank Indonesia press release No. 28/233/DKom: BI-Rate Tetap 5,75%: Memperkuat Stabilitas, Mendorong Pertumbuhan Ekonomi (2026-10-21)
  21. Overnight Policy Rate (BNM): 2.75% (unchanged). Bank Negara Malaysia policy rate. Malaysia, national. Basis date: 3 Sep 2026. Source: Bank Negara Malaysia: Monetary Policy Statement (3 September 2026)

Sources

  1. The Manila Times: Inflation threatens prolonged tightening (2026-10-27)
  2. The Manila Times: Fitch unit sees another rate hike by Dec (2026-10-24)
  3. Philstar: Inflation risks prompt BSP to hike rates anew (2026-10-22)
  4. Bank Indonesia press release No. 28/233/DKom (2026-10-21)primary
Weekly email

SEA Lending Brief

A weekly summary of lending, credit and regulation across Southeast Asia.

We will email you a link to confirm. Unsubscribe at any time. Privacy policy

Reports are for information only and are not investment advice.

A Japanese version of this article is available: 日本語版

More on Philippines

27 Oct 2026 · Competition & capitalUnionBank plans to fold its digital bank UnionDigital into the parent, pending BSP approval24 Oct 2026 · CreditBPI's nine-month profit slips as provisions rise 69.2%; card and personal loans grow fast23 Oct 2026 · Macro & householdsBSP raises policy rate by 50 basis points to 5.50% and lifts its 2027 inflation forecast

Philippines overview: key indicators and all articles →