TY-LED Metrobank expects economic conditions to improve in 2026 after a volatile year marked by global policy shocks and weak domestic demand, as monetary easing in the United States and the Philippines supports growth, the lender said in a market outlook.
“Coming from a year of surprises, we are expecting a better 2026 as both global and domestic economies recover,” Metropolitan Bank & Trust Co. said.
The bank expects the US economy to stage a modest recovery following a shallow recession last year, although growth is likely to remain constrained by weak demand and a cooling labor market. Inflation is projected to stay above target, but risks to employment could keep rate cuts on the table at the Federal Reserve.
“With the Fed’s dual mandate and a more dovish voting lineup in 2026, the central bank may tolerate slightly higher inflation if it supports the labor market,” Metrobank said, noting expectations of leadership changes after Jerome Powell.
Metrobank forecasts the Fed to cut rates by a cumulative 100 basis points in 2026, bringing the fed funds rate to a terminal range of 2.50 percent to 2.75 percent.
At home, the Bangko Sentral ng Pilipinas (BSP) is seen continuing its easing cycle after inflation fell below the two to four percent target band last year. Inflation is expected to return within target in 2026 on base effects, giving the BSP room to cut rates by a further 50 basis points by end-2026.
Philippine growth is expected to strengthen as government spending improves after a fiscal freeze, while investment and consumption recover as policy rates move toward neutral. However, Metrobank warned that elevated household debt and weak sentiment could cap gains.
Inflation is forecast to rise to about 3.3 percent in 2026 from an estimated 1.7 percent in 2025, driven by stronger demand, easing monetary conditions, higher import costs and a weaker peso.
Metrobank also revised its peso outlook to the downside, citing expectations of a stronger dollar and subdued investor sentiment, even as resilient exports help narrow the current account deficit.
“Overall, 2026 presents a more constructive backdrop, with easing inflation pressures, a more accommodative policy environment and improving growth prospects,” the bank said, adding that consistent policy support and reforms would be key to sustaining the recovery. / KOC