The Bangko Sentral ng Pilipinas (BSP) is poised to extend its tightening cycle as foreign lenders believe that the central bank will prioritize anchoring inflation expectations over mounting risks to economic growth.

Following the Monetary Board’s decision last week to raise the benchmark interest rate by 25 basis points to 4.5 percent—the first increase in two years—private sector economists are bracing for a more aggressive path to combat a deteriorating price outlook.

Dutch financial giant ING is among the most hawkish, having revised its outlook to include an additional 50 basis points (bps) of hikes within 2026.

Deepali Bhargava, ING regional head of research for Asia-Pacific, noted that the April hike “reinforces the BSP’s long-standing commitment to price stability, while downplaying the role of monetary policy in addressing near-term growth risks.”

BSP Governor Eli M. Remolona Jr. earlier said the policy-setting body actively discussed a larger 50 bps move during their latest review, signaling a low tolerance for inflation breaches.

“We now expect an additional 50 bps of hikes in 2026, assuming material de-escalation in the United States (US)-Iran conflict by the end of the second quarter of 2026,” Bhargava said.

Similarly, the research arm of Australia and New Zealand Banking Group Ltd. (ANZ) echoes this hawkish sentiment, forecasting two more quarter-point hikes to bring the policy rate to five percent by the third quarter of 2026.

ANZ tweaked its full-year inflation forecast upward, raising it from three percent to 6.2 percent for 2026.

ANZ analysts Kausani Basak and Sanjay Mathur pointed to the everyday price index (EPI)—which tracks frequently purchased essentials—rising faster than the headline CPI as a primary driver of shifting sentiment.

“Keeping inflation expectations anchored will be key for the BSP,” ANZ noted, especially as the country remains highly vulnerable as a net energy importer.

Singapore-based DBS Bank labeled the Philippines as “among the most vulnerable in the region to the prevailing oil price shock,” with economist Radhika Rao expecting this risk to prompt another hike as early as the next policy meeting in May.

Rao also cited continued pressure on the peso and the government’s declaration of an “energy emergency.” This move would place the BSP among a regional league of policymakers tightening preemptively to defend currencies and contain second-round effects.

Nomura’s Euben Paracuelles also noted that the tone remains hawkish, maintaining a forecast for a hike to 4.75 percent in the third quarter, while warning of an escalating risk that this move could be brought forward to June.

American banking giant Citi added a June hike to its base case, emphasizing the BSP’s preference for a gradual approach. Unlike the highly hawkish economists, Citi suggested that the BSP may stop at just one more quarter-point hike to avoid a “high cost to economic growth.”

Even with more hikes, Citi noted that real policy rates—adjusted for inflation—could remain negative for the rest of the year. This provides a level of accommodative support to a weak GDP.

With global crude prices remaining elevated and supply disruptions in the Strait of Hormuz persisting, banks agree that the Philippine monetary authorities are now in a front-loaded defensive mode to ensure price pressures do not become more entrenched.