The Philippines’ 10-year government bond yield edged below 6.9%, retreating from a nearly two-year high after the central bank opted to keep rates unchanged at an off-cycle meeting, signaling a more cautious approach to further tightening. National Treasurer Sharon Almanza said the decision could help stabilize the bond market following a series of weak auctions driven by sharply higher yields. Upward pressure on yields had been fueled by rising inflation, exacerbated by a spike in oil prices linked to the Iran conflict, prompting the central bank to raise its 2026 inflation forecast to around 5.1%.
Although inflation risks are seen breaching the 4% ceiling in the near term, the Bangko Sentral ng Pilipinas left its policy rate at 4.25%, choosing instead to gauge the delayed effects of the previous 225 basis points of easing. Governor Eli Remolona said economic growth is expected to remain fragile and cautioned that additional tightening could set back the recovery. Even so, policymakers emphasized that the upcoming March CPI reading will be crucial in determining whether rate hikes might resume as early as April.
