The current inflation rate remains within the government’s outlook for this year until 2027, Malacañang Palace said on Thursday.

This was the core of the discussion between Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. and President Ferdinand R. Marcos Jr. at Malacañang Palace on Tuesday.

Their discussion was substantially focused on the central bank’s recent interest rate cuts and the country’s broader macroeconomic outlook for 2026.

“Patuloy na nananatiling mababa at kontrolado ang antas ng headline inflation at inflation para sa pinakamababang 30 percent ng income household sa bansa. Nananatiling kontrolado ng pamahalaan ang mga posibleng panganib sa inflation outlook at inaasahang pasok pa rin sa itinakdang target na antas nito sa taong 2026 at 2027,” said Malacañang press officer Claire Castro in a Palace briefing on Thursday. 

(“Headline inflation and inflation for the lowest 30 percent of income households in the country continue to remain low and under control. The government remains mindful of potential risks to the inflation outlook and is expected to remain within its target levels in 2026 and 2027.”)

Recovery starting Q2 2026 to 2027

Castro said production has been affected by weak market confidence, “but the economy is expected to gradually recover starting in the second quarter of 2026 to 2027.”

“However, growth challenges remain more severe, especially if investor and consumer confidence recover more slowly,” she added.

The Philippine Statistics Authority on 6 January 2026 reported that the country’s headline inflation rate, or overall inflation, increased to 1.8 percent in December 2025 from 1.5 percent in November 2025.

Asked about the continuous surge of prices in the wet market, Castro said the Palace will be seeking a report from Agriculture Secretary Francisco Tiu Laurel Jr. on the matter as they don’t have enough information on prices of agricultural commodities.

Recovery dependent on various factors

Earlier, the World Bank anticipated the country’s economic growth to recover in the next two years, projecting a boost in private consumption if inflation stays low, employment remains strong, and monetary easing lowers interest rates, which would encourage businesses and households to spend and invest more.

The World Bank also expects investments to strengthen as public infrastructure projects implementation resumes and the realization of recent liberalization reforms improves the business environment.

To ensure long-term and sustained growth, the World Bank said low-income and middle-income regions should continue to grow faster than Metro Manila.  

Imbalances seen ASEAN-wide

In terms of financial markets, Castro said the depreciation of the peso is caused by a trade and financial imbalance, which is not only experienced by the Philippines but by other countries in Asia as well.

“They are in a similar situation and also experiencing a depreciation of their currencies in 2025,” she pointed out. “This also reflects the general tension of the US dollar and the expected delay in lowering interest rates by the US Federal Reserve. So, the BSP is more focused on preventing excessive movement in the value of the peso than on setting a specific exchange rate.”

Peso rebounds

On Wednesday, the Bankers Association of the Philippines reported that the peso rebounded, closing at P59.261 versus the greenback, surging by 19.4 centavos from its P59.455 finish on Tuesday.

Further, Castro said the President doesn’t want the Philippine peso to reach P60 versus a dollar, stating that the BSP is consistently monitoring the peso-dollar exchange.

“The President doesn’t want it to go up to P60. So, let’s just wait and see what else will be discussed and what the BSP will do about this,” she said.