Economists are united in expecting the Bangko Sentral ng Pilipinas (BSP) to raise interest rates at its June 18 policy meeting, although views differ on the size of the increase as inflation remains well above the central bank’s target despite easing in May.

Most economists surveyed by The Philippine Star expect the BSP to extend its tightening cycle to contain inflationary pressures. Four forecast a 50-basis-point increase, while five expect a smaller 25-basis-point move.

Aris Dacanay, senior ASEAN economist at HSBC, said inflation risks remained a greater concern for the BSP than weak economic growth. He expects the central bank to deliver a 50-basis-point increase, taking the policy rate to 5%.

Dacanay said the moderation in inflation during May had done little to alter the broader outlook, arguing that lower oil prices had largely driven the slowdown and that the effect could prove temporary given continuing geopolitical tensions in the Middle East.

He also highlighted risks to food prices from higher fertiliser costs and the prospect of El Niño. A more aggressive policy response could also help limit exchange-rate volatility and support the peso if the US Federal Reserve adopts a more hawkish stance.

Jonathan Koh, economist for Asia at Standard Chartered, likewise expects a 50-basis-point increase to 5%.

According to the Star, Koh said inflation remained the BSP’s primary concern despite weaker domestic growth, citing persistent underlying price pressures, continued depreciation of the peso and upside risks from energy and food costs.

He expects the BSP to maintain a hawkish stance in the near term, with a further 25-basis-point increase possible in August before policy easing begins in 2027, once inflation returns to the BSP’s 2%-4% target range.

Inflation eased to 6.8% in May from 7.2% in April, but remained well above target. Core inflation accelerated to 4.1%, sustaining pressure on policymakers to tighten further.

Jun Neri, lead economist at BPI, also expects a 50-basis-point increase, arguing that the BSP needs to catch up with inflation and reinforce its commitment to price stability.

He warned that second-round effects, including rising services inflation, have yet to fully emerge and could lead to broader price increases as higher costs are passed on to consumers.

Neri added that the BSP must also guard against excessive currency volatility while the peso remains under pressure and the gap between inflation and policy rates stays wide.

He said the softer inflation reading in May should not be viewed as a reason to delay further tightening, but rather as an opportunity for the BSP to demonstrate its commitment to price stability and counter perceptions that it has fallen behind the inflation curve.

Meanwhile, Michael Ricafort, chief economist at RCBC, also expects a 50-basis-point increase, citing inflation risks linked to El Niño, elevated fertiliser prices, peso weakness and potential disruptions to global energy supplies.