The Bangko Sentral ng Pilipinas (BSP) has likely exhausted its window for monetary easing as resurgent price pressures threaten to breach the upper limit of its target range, according to the ASEAN+3 Macroeconomic Research Office (AMRO).

While the Philippine economy shows signs of stabilizing despite the global energy crunch, the regional surveillance body warned that escalating supply-side risks have forced a shift in the policy outlook.

Dong He, AMRO chief economist, told reporters during the launch of the ASEAN+3 Regional Economic Outlook (AREO) 2026 on Monday, April 6, that the central bank should maintain its current stance to gauge the longevity of recent shocks.

“We don’t see room for rate cuts at the moment, given the upside risks to inflation in the Philippines. This is a supply shock, so the policy advice is to wait and see how long the shock will last,” he said.

AMRO tweaked its inflation forecast for the Philippines upward to 3.9 percent from 3.2 percent previously. Even as global price shocks began hitting the local economy, this revised forecast remains within the central bank’s target band of two to four percent.

Inflation is also expected to normalize in 2027, easing to 3.6 percent.

Even so, He noted that this elevated inflation risk makes monetary policy “a little bit more constrained.” Recall that previously benign inflation allowed the BSP to deliver successive easing to as low as 4.25 percent from the peak of 6.5 percent in 2024.

He said the local authorities should now monitor how long the ongoing Middle East tensions will persist, adding that sustained inflationary pressures may force the BSP to play its cards to tame the surging price hikes.

While the Monetary Board (MB) held a rare, off-cycle policy meeting in March, the policy-setting body still opted to keep the benchmark rate steady, arguing that inflation expectations remain well-anchored and that the existing risk is largely supply-driven, for which policy adjustments have limited impact.

BSP Governor Eli M. Remolona Jr. also stressed the silver lining the moderating economy brings, as it could cap further acceleration of price growth. AMRO also maintained its within-target growth assumptions for the Philippines this year at 5.3 percent.

While AMRO made no changes to its outlook, the Philippines is still not expected to emerge unscathed from the energy shocks. Allen Ng, AMRO group head and lead economist, said the Philippines had the potential for faster growth before the United States (US)/Israel-Iran military hostilities rattled the global oil market.

“I think the Philippines had strong growth momentum prior to the escalation of the conflict, driven largely by domestic demand. Had the Iran conflict not occurred, growth in the Philippines could have been higher,” Ng said.

AMRO has projected this gradual economic rebound to gain momentum this year and the next, with gross domestic product (GDP) growth expected to clock in at 5.8 percent in 2027. The economy slumped to 4.4 percent growth in 2025, crippled by corruption in flood control.

Overall, He stressed the local economy’s solid standing in 2025, even characterizing it as being in a “pretty healthy condition” when it entered 2026. This suggests a rosy outlook for Philippine growth despite the global chaos stirred by fuel shocks.

Note that the Philippines is among the most vulnerable economies in Asia, given that it sources nearly all its oil and gas imports from the Middle East.