Off-cycle rate hike unlikely with political noise
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By Andrea E. San Juan
APAN-BASED think tank Nomura and Filipino analysts concur that rising political uncertainty, which could sap fiscal execution and growth, could temper the need for aggressive raising of interest rates, hence also leaving little to no chance for an off-cycle move. In a commentary on Wednesday, Nomura said that it expects the Bangko Sentral ng Pilipinas (BSP) to deliver a quarter-point rate hike at its upcoming policy meeting. However, the think tank said: “We think BSP will remain measured and a hike off-cycle is unlikely as the output gap remains negative and political uncertainty is rising, which could still affect the fiscal outlook.” Local experts shared the same view as the Japan-
based think tank, explaining how the current political environment in the Philippines could also have a hand in monetary policy decisions. Ruben Carlo Asuncion, chief economist of Union Bank of the Philippines (UBP) told the BusinessMirror in a message: “Rising political uncertainty can weaken fiscal execution and growth, widening the output gap,” adding that these series of events could push the central bank toward a “more cautious stance.” John Paolo Rivera, a Senior Research Fellow at state think tank Philippine Institute for Development Studies (PIDS), asserted that the strength of an economy “ultimately reflects the strength of its institutions.” As such, Rivera pointed out: “Too much political drama is not good for the economy. For monetary policy, this creates a more difficult balanc-
ing act because tighter rates may help stabilize inflation and the peso, but they may also further slow growth and confidence.” The state think tank’s senior research fellow explained further that escalating political uncertainty can weaken investor confidence, affect market sentiment and “potentially delay spending and investment decisions.” “It may also raise concerns about fiscal discipline and policy continuity,” added Rivera. As a consequence, these analysts said this reinforces the case for a “measured approach” on the part of the central bank—the body that manages inflation with interest rate-setting as one of its tools. Asuncion interpreted “measured” as gradual and data-dependent—not necessarily capped at 25 basis points.
“While 25bps remains the baseline increment, larger or earlier moves may still be warranted if inflation expectations become unanchored,” the Union Bank’s chief economist told this newspaper. Rivera echoed Asuncion, pointing out that a “calibrated” approach such as 25bps if needed “may be more appropriate than aggressive tightening, especially since the BSP cannot solve all problems with a rate hike.” “It cannot produce rice, unclog supply chains, or reduce political uncertainty. Monetary policy works best when complemented by credible fiscal and supply-side measures,” the senior research fellow of PIDS underscored.
Negative output gap
THE analysts also cited the Philippine economy’s See “Noise,” A2
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Thursday, May 28, 2026 Vol. 21 No. 226
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By Justine Xyrah Garcia
HE Philippines could again see double-digit inflation for the first time in nearly two decades as second-round effects from the Middle East conflict continue to spread across the domestic economy, economists from the University of Asia and the Pacific (UA&P) warned. In its latest Market Call report, UA&P said inflation is likely to remain above the government’s
2- to 4-percent target range for the rest of 2026, warning of the See “War,” A2
PHL TO ELEVATE TIES WITH JAPAN TO THE HIGHEST LEVEL By Samuel Medenilla
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ECOGNIZING the growing “proactive role” of Japan in the Indo-Pacific region amid increasing geopolitical tensions, President Ferdinand Marcos Jr. is now pushing to elevate the country’s diplomatic relations with Tokyo to its highest level under a Comprehensive Strategic Partnership. This will make Japan the first ever country, with the highest diplomatic partnership with Manila under its four-tier system. Currently, Japan together with India, Vietnam, South Korea, and Australia are in the third tier or in a Strategic Partnership with the Philippines.
Marcos said he considers Japan one of the country’s most reliable partners amid growing global uncertainty, which have resulted in “disruptions in supply chains, and mounting pressures on the rules-based international order.” “It is in this context that the Philippines and Japan are moving to elevate our relations to a Comprehensive Strategic Partnership, the highest tier in our diplomatic framework, and a first for the Philippines,” he said in his meeting with the Japan-Philippines Parliamentary Friendship League on Wednesday. “This step attests to the exceptional level of trust between our two countries and our common resolve to further deepen cooperation in See “Japan,” A2
PRAYER UNITES FILIPINO MUSLIMS ON EID Filipino Muslims gather in prayer at the Quirino Grandstand in Rizal Park and the Quezon Memorial Circle on Wednesday, May 27, 2026, as they
celebrate Eid al-Adha, or the “Festival of Sacrifice,” one of Islam’s most sacred observances. The occasion commemorates the faith and obedience of Prophet Ibrahim (Abraham), who was willing to sacrifice his son in submission to Allah’s command before the sacrifice was replaced with an animal. Filipino Muslims mark the feast through communal prayers, acts of charity, animal sacrifice, and compassion, reflecting the deeper values of devotion, sacrifice, and solidarity within the Islamic faith. Eid al-Adha also coincides with the culmination of the Hajj pilgrimage in Mecca and is observed on the 10th day of Dhu al-Hijjah, the final month of the Islamic calendar. NONOY LACZA AND ROY DOMINGO
House okays 5 bills under Ledac list By Jovee Marie N. dela Cruz
LIGHTING A FLAME FOR TRUTH Members of the newly formed EJK Truth
Commission formally launch the independent, civilian-led, truth-seeking body dedicated to documenting extrajudicial killings and related abuses in the Philippines on Wednesday, May 27, 2026, at Villa San Miguel in Mandaluyong City. In photo are (from left): Dr. Al Fuentes, Commissioner for Psychosocial Support and Trauma Healing; Carlos Conde, Commissioner for Public Documentation, Transparency and Democratic Accountability; Dr. Raquel Fortun, Commissioner for Forensic Sciences and Independent Investigation; Cardinal Pablo “Ambo” David, adviser; Atty. Raul Pangalangan, Commissioner for Legal Affairs and Due Process; and Fr. Daniel Franklin E. Pilario, CM, Commissioner for Church and Education, Truth Literacy and Institutional Reform. The commission aims to establish a credible public record of alleged extrajudicial killings and related human rights abuses, while promoting truth-telling, accountability, healing, and institutional reform. Story in A5 News. NONOY LACZA
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HE House of Representatives moved closer to completing nearly half of the LegislativeExecutive Development Advisory Council (Ledac) priority measures after approving five key bills on second reading during a marathon session late Tuesday. Approved via viva voce vote, the measures cover economic development, social welfare, digital regulation, and government transparency. The session adjourned at 11:59 p.m.
The latest approvals highlight the chamber’s push to sustain its legislative momentum, even as lawmakers prepare for the Senate impeachment trial of Vice President Sara Z. Duterte. The five measures are House Bill (HB) No. 9257, which seeks to strengthen the Bases Conversion and Development Authority (BCDA); HB 9397, or the Right to Information Act of 2026; HB 9461, or the Child Online Safety and Protection Act of 2026; HB 9465, or the Anti-False Information and Digital Accountability Act; and HB 9466 or the National Nutrition
Program Act. HB 9257 seeks to amend Republic Act No. 7227 by reinforcing the powers of the BCDA to better drive major infrastructure projects. Meanwhile, HB 9397 aims to institutionalize public access to government information while balancing transparency with privacy rights. It proposes the creation of an independent Right to Information Commission, a centralized request portal, and penalties for non-compliant agencies. Cagayan de Oro Rep. Lordan Suan, chair of the House Committee on Public
Information, underscored the measure’s importance amid ongoing corruption concerns tied to public spending. HB 9465 targets the spread of disinformation by holding digital platforms accountable and promoting media literacy. Lawmakers backing the bill stressed that freedom of expression should not protect deliberate falsehoods. The measure imposes penalties of six to 12 years in prison and fines ranging from P500,000 to P2 million for those proven to have intentionally spread harmful false information. See “Ledac,” A2
PESO EXCHANGE RATES n US 61.4370 n JAPAN 0.3867 n UK 82.9768 n HK 7.8430 n CHINA 9.0570 n SINGAPORE 48.1217 n AUSTRALIA 44.0380 n EU 71.5250 n KOREA 0.0405 n SAUDI ARABIA 16.3731 Source: BSP (May 26, 2026)