The Bangko Sentral ng Pilipinas (BSP) has once more increased its benchmark interest rate, raising it by 25 basis points to combat ongoing inflationary pressures. The new rate now stands at 4.75 percent.
This adjustment reflects the BSP's strategy to anchor inflation expectations, with overnight deposit and lending facility rates set at 4.25 percent and 5.25 percent, respectively.
Continued Vigilance in Monetary Policy
In light of the most recent data, the Monetary Board decided that monetary tightening is still warranted.
Eli Remolona Jr., BSP Governor
Governor Eli Remolona Jr. emphasized the importance of remaining vigilant, stating that the central bank will adjust its policies based on incoming economic data.
- Inflation projected at 6.4% for 2026
- Expected to return to target range by 2028
Remolona mentioned the impact of a prolonged global energy crisis on the Philippines' economy, exacerbated by geopolitical tensions. He pointed to the effects of the US-Iran peace deal and the need for time to restore oil supply chain stability.
While most analysts anticipated a 25-basis point increase, some argued for a steeper hike of 50 basis points. Remolona indicated that the central bank prefers gradual adjustments to maintain market stability.
BSP Deputy Governor Zeno Ronald Abenoja warned that inflation could remain above the desired range until 2028, with current projections indicating a 6.4 percent rate for this year.
The BSP is prepared to implement further monetary measures if inflation risks escalate, with a commitment to maintaining the 3.0 percent target.