BSP raises policy rates by 25 basis points

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on Thursday raised its key policy interest rates by 25 basis points, citing continued inflationary pressures driven by elevated global oil and fertilizer prices.

The latest adjustment brings the BSP’s target reverse repurchase (RRP) rate to 4.75 percent. Correspondingly, the overnight deposit facility rate was increased to 4.25 percent, while the lending facility rate was raised to 5.25 percent.

“Given recent developments in the Middle East, inflationary pressures remain strong. Global oil and fertilizer prices are still elevated and continue to put pressure on domestic fuel and food prices,” BSP Governor Eli Remolona Jr. said in a briefing.

He added that inflation risks remain broad-based, with core inflation continuing to rise, signaling persistent second-round effects across the economy.

“Core inflation continues to rise, indicating that inflation is spreading through second-round effects. The latest BSP projections indicate headline inflation will remain above the 4 percent tolerance ceiling in both 2026 and 2027,” Remolona said.

BSP Deputy Governor Zeno Abenoja said the central bank now expects inflation to average 6.4 percent in 2026 and 4.5 percent in 2027, slightly higher than earlier forecasts of 6.3 percent and 4.3 percent, respectively.

Inflation is projected to ease back within target by 2028, when it is expected to settle at 3.1 percent.

“In light of the most recent data, the Monetary Board decided that monetary tightening is still warranted. Today’s policy action will help keep inflation expectations anchored and will mitigate the risk of second-round effects,” Remolona said.

He noted that the policy decision was calibrated to balance price stability with broader economic support, including efforts to sustain consumption and investment.

“The Monetary Board will continue to be vigilant and guided by incoming data. We are prepared to take further monetary action to ensure that inflation returns to the 3 percent target,” he added.

The BSP said the move reflects its continued commitment to maintaining price stability amid global uncertainty and lingering supply-side pressures affecting domestic inflation.