Philippines raises benchmark interest rate by 50 basis points
The increase takes the policy rate to 5.50%, following September inflation of 7.2% and further weakness in the peso.
Philippine borrowing costs rose on October 22 as the Bangko Sentral ng Pilipinas (BSP) raised its benchmark interest rate to 5.50%. Governor Eli Remolona Jr. announced the 50-basis-point increase, the Monetary Board’s fourth consecutive rise this year, amid inflation pressures and a weakening peso.
September inflation was 7.2%, up from August’s 6.1% and outside the central bank’s target of 2% to 4%. Excluding selected volatile food and energy items, core inflation stood at 4.7%, a three-year high.
The BSP’s forecasts before the decision put average inflation at 6.1% for 2026 and 5.4% for 2027. Its effort to dampen spending through costlier credit comes as economic growth slowed to 2.3% in the second quarter.
Former BSP deputy governor Diwa Guinigundo and economist Wilhelmina Manalac had advocated a 50-basis-point increase in an October 20 report for GlobalSource Partners. They argued that action was needed to keep inflation from becoming entrenched, while recognising risks to the economy.
BPI lead economist Emilio Neri Jr. anticipates a further December increase of 25 basis points, which could bring the rate to 5.75% by year-end. December 17 is the date set for the board’s last scheduled policy meeting of 2026.
