Netherlands-based financial giant ING does not expect the Bangko Sentral ng Pilipinas (BSP) to end its easing cycle in the upcoming monetary policy meeting, citing below-target inflation and a continued appreciation of the peso.

These factors, coupled with “high real rates, and uncertainty over global growth, reinforce our view that monetary policy easing is far from over,” Deepali Bhargava, head of research at ING Asia-Pacific, said in the bank’s week-ahead report published Friday, June 13.

The Monetary Board (MB), the BSP’s top policy-making body, will determine the next monetary policy stance on June 19, Thursday next week.

Following an expected extension of interest rate cuts by a quarter point this month, the MB’s next monetary policy decision will be on Aug. 28, the only meeting in the third quarter. The two remaining policy meetings for 2025 will be in the fourth quarter, on Oct. 9 and Dec. 11.

The latest data from the Philippine Statistics Authority (PSA) showed that annual increases in consumer prices dropped to 1.3 percent in May, the lowest inflation rate in five-and-a-half years or since the pre-pandemic period. Notably, the poorest households experienced no increase in overall prices.

The May inflation rate fell far below the government’s target band of two to four percent. It was also at the midpoint of the central bank’s forecast range of 0.9 percent to 1.7 percent.

According to ING, the modest inflation reading for May gives room for another 25-basis point (bp) cut by the BSP. If realized, it would bring the key borrowing cost down to 5.25 percent from the current 5.5 percent.

Since the BSP kicked off its easing cycle in August last year, it has so far slashed a total of 100 bps from a policy rate of 6.5 percent prior to monetary policy loosening.

It would take three more quarter-point cuts for the key borrowing rate to settle at the 4.75-percent level, at which the market has been expecting the easing cycle to close this year.

Over a week ago, MUFG Bank Ltd. projected the peso to sustain its appreciation against the United States (US) dollar until early 2026. According to earlier reports of Manila Bulletin, the Japanese financial giant projected the peso to keep gaining strength, settling at the ₱54 level by year-end though the first quarter of 2026.

It cited subdued inflation, the improvement in brick-and-mortar foreign direct investment (FDI), the possibility of a trade deal with the US, and the country’s strong infrastructure spending as supportive of the relatively stronger peso.

But the latest report from the BSP showed that net inflows of FDI into the Philippines fell to $498 million in March, the lowest in three months, as heightened political instability and lingering US tariff-led uncertainty eroded investor confidence.