Frankfurt-based Deutsche Bank AG has called for a jumbo 50-basis-point (bp) interest rate hike on Thursday, arguing that a larger increase would tackle growing price pressures head-on and avoid the need for more drastic tightening later.

In a June 12 commentary, Deutsche Bank wrote that the Bangko Sentral ng Pilipinas’ (BSP) upcoming meeting “presents a close call between a 50-bp and 25-bp hike, but we lean towards a 50-bp policy rate increase to five percent.”

“We think a more decisive move now from the BSP would reduce the risk that it has to do more later,” Deutsche Bank economists said.

For the German lender, May’s lower inflation print of 6.8 percent does not mean the threat has been tamed. “On the surface, [May inflation] seems to imply that inflation is cooling, but our analysis of underlying inflation does not suggest the same,” it said.

“This respite may only be temporary, and broad price pressures are still building up in the economy,” Deutsche Bank warned. May’s headline figure had eased slightly from the more-than-three-year high of 7.2 percent recorded in April.

By making such an aggressive call, Deutsche Bank joins British banking giants HSBC and Standard Chartered in the hawkish camp.

“Headline consumer price index (CPI) inflation in May surprised to the downside, but the fact of the matter remains the same: inflation will likely continue to accelerate,” Aris Dacanay, HSBC senior economist for the Association of Southeast Asian Nations (ASEAN), said.

Other foreign lenders hold less hawkish positions on the upcoming monetary policy adjustment.

Singapore-based Oversea-Chinese Banking Corp. (OCBC) expects the BSP to deliver a more measured 25-basis-point hike on Thursday, acknowledging the market's split expectations between a quarter-point and a half-point increase.

OCBC's quarter-point forecast aligns it with Barclays, Singapore’s UOB and DBS Bank Ltd., Dutch financial giant ING, and Chinabank Research.

Justifying the need for further tightening, Barclays noted that the Philippines and Brazil are the only emerging markets (EMs) that have yet to contain food inflation pressures. Higher interest rates, the bank argued, could help temper domestic demand and prevent elevated food prices from spilling over into broader, demand-driven inflation.