Philippine inflation climbed to 2 percent in January from 1.8 percent in December 2025, landing squarely at the bottom of the government’s 2 percent to 4 percent target range and underscoring the economy’s continued lack of price pressure.
The reading falls comfortably within the Bangko Sentral ng Pilipinas’ (BSP) January inflation forecast of 1.4 percent to 2.2 percent, reinforcing the central bank’s view that inflation risks remain subdued.
Against this backdrop, the BSP reiterated that its monetary easing cycle is “nearing its end,” even as domestic demand has yet to show convincing strength despite multiple policy rate cuts since 2024.
“The inflation outlook continues to be benign while inflation expectations remain well anchored,” the BSP said in a statement.
However, the central bank acknowledged that domestic economic output remains weak, pointing to sustained declines in business sentiment driven by governance concerns and lingering uncertainty over global trade policy.
“Nevertheless, domestic demand is expected to rebound gradually as the effects of monetary policy easing work their way through the economy and public spending improves,” the BSP said.
“On balance, the Monetary Board sees the monetary policy easing cycle as nearing its end. Any further easing is likely to be limited and guided by incoming data.”
The Monetary Board’s first policy rate-setting meeting this year is set for Feb. 19, where the BSP is widely expected to push through another cut in key interest rates despite already aggressive easing.
Since August 2024, the BSP has slashed key policy rates by a cumulative 200 basis points to prop up domestic growth, taking advantage of persistently low inflation, which averaged just 1.7 percent last year.
Rizal Commercial Banking Corp. chief economist Michael Ricafort described January inflation as remaining “relatively benign.”
He expects inflation to average 3 percent this year.
“Nevertheless, that could still support monetary easing measures such as cut/s in local policy rates and banks’ reserve requirement ratio (RRR), as part of the policy priorities to boost economic/GDP (gross domestic product) growth,” Ricafort said.
PNA PHOTO