Headline inflation in the Philippines reached 7.2% in September. The next month, the Bangko Sentral ng Pilipinas (BSP) answered with a 50 basis point increase in its benchmark rate, taking it to 5.50% at its October 2026 meeting.
It was the fourth increase in a row. It was also bigger than markets had expected.
The central bank gave two reasons: to curb renewed inflation pressure, and to support the peso, which had dropped to a record low. Rates on the overnight deposit and lending facilities were lifted too, to 5% and 6%.
Risks the bank flagged
The BSP warned that inflation risks are building. Renewed tension in the Middle East is pushing global oil prices higher, and rising transportation fares are adding to costs. El Niño conditions also threaten farm output. Core inflation is projected to climb further.
On the bank’s outlook, inflation will stay elevated through 2027 and approach its 3.0% target only in 2028. Domestic economic activity, by contrast, is expected to recover with help from fiscal measures.
Where the rate sits in history
Trading Economics, which tracks the data, puts the Philippine policy rate’s average at 7.21% from 1985 to 2026. The all-time high was 31.00% in January 1985 and the record low 2.00% in November 2020. The Monetary Board of the BSP sets the rate, and the official rate is the overnight reverse repo rate.
Looking ahead, Trading Economics expects the rate to stay at 5.50% through the end of the quarter. Its own models trend toward 5.00% in 2027 and 4.50% in 2028.
Sources
Sources
- Google News – Philippine interest rate hike – Overview
- Philippine finance secretary sees ‘long pause’ in rate hikes
