THE Bangko Sentral ng Pilipinas (BSP) may begin easing policy as early as December, with a steeper yield curve and a recovery in economic momentum expected in 2026, an economist said on Wednesday, Nov. 19, 2025.
Speaking at Metrobank’s 2025 Market Movers series, Metrobank chief economist and markets strategist Nicholas Mapa, outlined five themes shaping the Philippines’ medium-term outlook, projecting that a combination of revived public construction and the lagged impact of monetary easing will underpin a growth rebound in 2026.
The briefing, themed “Trump, Tariffs, and the Terminal Rate: The New Global Order,” gathered Metrobank’s private wealth and corporate clients. The bank partnered with Fitch-owned research firms CreditSights and BMI to provide global macro and credit insights.Mapa said this year’s “fiscal freeze” — the slowdown in government spending — will limit near-term expansion but noted that capital formation and investment activity are likely to recover next year, supporting stronger gross domestic product growth.
Inflation, which dipped below the BSP’s target in 2024, is expected to climb back toward the upper end of the two to four percent range by mid-2026. The uptick will be driven by base effects, rising global commodity prices and potential tariff-related pressures from the United States, he said. Despite this, full-year inflation is still projected to stay within target.
Dovish stance
Mapa expects the BSP to maintain a dovish stance even as inflation moves closer to four percent, saying the central bank will remain focused on bolstering weak growth. The BSP has already cut a total of 175 basis points from its 6.50 percent peak policy rate after five meetings this year, bringing benchmark rates down to 4.75 percent as of Oct. 9.
With easing underway, the yield curve is seen to steepen. Short-end rates are likely to fall on expectations of additional BSP cuts, while long-term yields may rise as the government shifts borrowing toward 10-year maturities and as inflation gradually picks up.
Mapa also flagged pressure on the peso through 2026 and 2027. Although a weaker dollar could persist amid the U.S. Federal Reserve’s own easing cycle, he said the Philippines’ widening current account deficit will continue to weigh on the currency.
“These factors together define the contours of the Philippines’ economic landscape as we move toward 2026,” Mapa said. / KOC