THE research unit of Australia and New Zealand Banking Group Ltd. (ANZ) has raised its inflation forecast for the Philippines, saying the rate could again top 4.0 percent in the second quarter but still average within target for 2024.

"The Philippines is the only economy where inflation risks overshooting the upper end of the official target range of 2-4 percent," ANZ Research said in a report on Tuesday.

It noted February's uptick to 3.4 percent, from 2.8 percent at the start of the year, and warned that "if this momentum is sustained, annual inflation will rise above 4 percent from the next quarter."

The Bangko Sentral ng Pilipinas (BSP), which wants to keep inflation within 2.0 to 4.0 percent, has warned that the rate could rise this month. March inflation data will be released next week on April 5.

ANZ Research revised its full-year 2024 forecast for Philippine inflation to 3.8 percent from 3.5 percent and said that "monthly momentum will need to halve if annual inflation is to remain in the official target range."

Surging inflation prompted the BSP's policymaking Monetary Board to raise key interest rates by 450 basis points beginning May 2022. The central bank's benchmark rate currently stands 6.5 percent, the highest since 2007.

ANZ noted that declining inflation could generate sufficient confidence for most central banks to begin reducing their interest rates.

"This provides space for Asian central banks to start easing in the second half of the year once the Fed (US Federal Reserve) starts to cut rates," it added.

The Fed, which again kept interest rates steady last week, is widely expected to begin easing in June.

The Monetary Board, which will hold its own policy meeting on April 8, is also expected to pause anew.

Analysts have said that rate cuts will likely start in the second half of the year.