MANILA - The Bangko Sentral ng Pilipinas will likely raise interest rates as early as the fourth quarter, with inflation expected to pick up gradually, DBS Bank said Tuesday.
While headline inflation is steady, core inflation, which excludes volatile food and fuel prices, is rising gradually, said Gundy Cahyadi, an economist for the Singapore-based lender.
Consumer prices likely rose 3.1 percent in September, DBS said. The central bank had expected it to settle at 2.9 to 3.6 percent.
"Expect BSP to turn more hawkish in the coming meetings," Cahyadi said.
"We maintain our call for a 25 basis points rate hike" in each of the fourth quarter of 2017 and the first quarter of next year, he said.
A weak peso is adding to inflationary pressures, Cahyadi said, adding September inflation was likely driven by fuel and electricity rates.