BSP hikes interest rates by 50 basis points
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) Monetary Board raised its benchmark interest rate by 50 basis points to 5.50%.
In a statement on Thursday, October 22, the Monetary Board announced that the target Reverse Repurchase rate would increase to 5.50%.
This marks the BSP’s first 50-basis-point rate hike since February 2023, bringing cumulative rate increases to 125 basis points since the BSP began its tightening cycle in April.
This move also brings interest rates on the overnight deposit and lending facilities to 5.00% and 6.00%, respectively.
The central bank cited persistent inflation risks as the primary reason for the rate hike.
Average headline inflation is projected to accelerate in the coming months and remain elevated through 2027 before gradually moving toward the BSP’s 3% target in 2028.
Core inflation is also expected to continue rising, signaling broader cost pressures across the economy.
The Monetary Board said elevated global oil prices amid tensions in the Middle East, higher transport fares and lingering El Niño risks to agriculture have heightened inflation pressures.
While fiscal measures are expected to support domestic economic recovery, the Board stressed the need for a decisive and restrictive monetary policy stance was necessary to contain second-round effects and anchor inflation expectations.
While fiscal measures are expected to support domestic economic recovery, the Board emphasized the need for a decisive and restrictive monetary policy stance to contain second-round effects and keep inflation expectations anchored.
“This will contain second-round effects and firmly anchor inflation expectations,” the BSP said.
“The BSP stands ready to take further monetary policy action as necessary to ensure the timely return of inflation to the target, in keeping with our price stability mandate,” it added.
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