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Manila Bulletin devider Business devider Banking & Finance devider UOB sees pause in BSP easing cycle

UOB sees pause in BSP easing cycle

Published Feb 2, 2026 12:00 am  |  Updated Feb 1, 2026 07:07 am

Amid low inflation, Singapore-based United Overseas Bank Ltd. (UOB) expects the Bangko Sentral ng Pilipinas’ (BSP) loosening cycle to be cut short at its first monetary policy decision for 2026, slated for Feb. 19.

“The latest inflation outturn supports an interim pause in the BSP’s easing cycle when the Monetary Board (MB) meets for the first time this year,” UOB economist Lee Sue Ann said in the Singaporean bank’s February 2026 The Central Bank Watch report, published last Friday, Jan. 30.

For January, UOB forecasts inflation at 1.8 percent year-on-year, matching the December 2025 headline rate. Last year, the annual increase in consumer prices averaged 1.7 percent, a nine-year low and below the government’s two- to four-percent target range of manageable price hikes deemed conducive to economic growth.

The BSP had projected January inflation to land between 1.4 percent and 2.2 percent.

UOB noted that BSP Governor Eli M. Remolona Jr.’s latest remarks and earlier guidance indicated that any further rate cuts would be limited and data-dependent.

A combination of below-target inflation and sluggish economic growth in the aftermath of an infrastructure corruption scandal allowed the policy-setting MB to again reduce key interest rates by 25 basis points (bps) last December, bringing the policy rate to 4.5 percent.

“We maintain our call for a rate pause at 4.5 percent in the first quarter of 2026 and a final 25-bp cut to 4.25 percent in the second quarter of 2026,” UOB said.

The Singaporean bank said this projection is contingent on first-quarter gross domestic product (GDP) data, as well as changes in leadership at the United States Federal Reserve (US Fed).

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