Manila: The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on Thursday raised its key policy rates by 25 basis points, citing persistent inflationary pressures amid elevated global oil and fertilizer prices. The latest adjustment brings the BSP's target reverse repurchase (RRP) rate to 4.75 percent. The interest rates on the overnight deposit and lending facilities were likewise increased to 4.25 percent and 5.25 percent, respectively.
According to Philippines News Agency, BSP Governor Eli Remolona Jr. emphasized during a briefing that recent developments in the Middle East have sustained inflationary pressures. Global oil and fertilizer prices continue to drive domestic fuel and food prices upward. Remolona noted that core inflation is on the rise, indicating the spread of inflation through second-round effects. The BSP projects headline inflation to remain above the 4 percent tolerance ceiling in both 2026 and 2027.
BSP Deputy Governor Zeno Abenoja highlighted that the central bank now anticipates inflation to average 6.4 percent in 2026 and 4.5 percent in 2027, slightly higher than previous forecasts of 6.3 percent and 4.3 percent, respectively. For 2028, inflation is expected to return to within the government's target, settling at 3.1 percent.
In response to the latest data, the Monetary Board deemed further monetary tightening necessary. Remolona stated that the policy action aims to anchor inflation expectations and mitigate the risk of second-round effects. He also mentioned that the policy move is calibrated to support fiscal policy efforts directed at stimulating consumption and investment.
Remolona assured that the Monetary Board will remain vigilant and responsive to incoming data, prepared to take further monetary action if necessary to achieve the 3 percent inflation target.
