The Bangko Sentral ng Pilipinas (BSP) is widely expected to continue its tightening cycle at its upcoming policy meeting, dismissing July’s decelerating inflation as insufficient grounds for a pause.
Market participants anticipate that the central bank will maintain its hawkish posture, driven by a mandate to steer price growth firmly back to target rather than reacting to single-month data improvements.
This expectation reinforces the defensive stance of investors in Philippine assets.
Concerns over persistent inflationary pressures, compounded by the risk of weather-related supply shocks, have kept market participants cautious.
The medium to long end of the Philippine bond curve has remained under pressure as traders price in the likelihood of further rate increases or a prolonged period of restrictive policy.
The BSP’s approach contrasts with some regional peers, such as the Reserve Bank of India, which is widely expected to hold its benchmark repo rate steady in August.