BSP raises key rate to 4.5%

The Bangko Sentral ng Pilipinas raised its target reverse repurchase rate by 25 basis points to 4.5 percent on April 23, 2026, as policymakers moved to contain mounting inflation risks tied to global supply pressures and rising domestic prices.

In a press release, BSP Governor Eli M. Remolona Jr. said the Monetary Board also adjusted the interest rates on the overnight deposit and lending facilities to 4.0 percent and 5.0 percent, respectively.

The central bank said the inflation outlook has worsened amid the ongoing conflict in the Middle East, which has pushed up global oil and fertilizer prices and started feeding through to local fuel and food costs.

The BSP also flagged rising core inflation, saying broader underlying price pressures are beginning to build beyond volatile commodity categories.

Its latest projections now show a higher inflation path, with average headline inflation expected to breach the 4.0-percent tolerance ceiling in both 2026 and 2027.

The central bank added that inflation expectations have risen further, increasing the risk that price pressures could become more persistent and detach from the government’s inflation target.

After weighing its options, the Monetary Board said it found it necessary to take timely and preemptive action to safeguard price stability, which remains the BSP’s primary mandate.

The BSP said the rate increase is meant to anchor inflation expectations and contain possible second-round effects, or the broader spillover of higher energy and food prices into wages, transport costs and other goods and services.

At the same time, the central bank described the move as measured, saying the tighter policy stance should still allow the economy to accommodate recovery over the medium term.

The Philippines operates under an inflation-targeting framework, with the BSP aiming to keep inflation at 3.0 percent over time while balancing the need to support economic growth.

Looking ahead, the Monetary Board said it will continue to base its decisions on incoming data and stands ready to take all necessary monetary actions to bring inflation back to the 3.0-percent target.

The rate hike signals that the central bank is prioritizing inflation control as external shocks and domestic price pressures threaten to keep consumer prices elevated over the next two years.