DBS Group Research economists Radhika Rao and Chua Han Teng note that Bangko Sentral ng Pilipinas (BSP) raised its policy rate by 25 bps to 5.0% to anchor inflation expectations and support the Peso. Philippine Peso (PHP) is the only ASEAN-6 currency weaker in 3Q26 versus the Dollar, and DBS flags above-target inflation as leaving room for one more measured BSP hike this year.

Peso underperforms peers in 3Q26

“The Philippines’ BSP hiked its benchmark rate by 25bps to 5.0% yesterday, in line with our expectations, in a bid to contain inflation expectations and support the currency.”

“The peso is the only ASEAN-6 currency to have underperformed so far in 3Q26 (-0.8% vs the USD), while the others have appreciated by 0.9-1.7% over the same period.”

“Our baseline view is that ASEAN-6 central banks will remain on hold through the rest of 2026, with the Philippines as the sole exception. Above-target inflation leaves open the possibility of one final, measured BSP rate hike.”

“Such developments could bring BI and the BSP back into the tightening conversation first, while other central banks would respond more gradually.”