Philippine central bank raises policy rate, as expected
The move is in line with market expectations for a third consecutive tightening of policy
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[MANILA] The Philippine central bank raised its key interest rate by 25 basis points to 5 per cent on Thursday (Aug 27), in line with market expectations for a third consecutive tightening of policy.
Twenty-five of 29 economists in a Reuters poll had expected the move. Four others had projected the central bank to keep the rate unchanged at 4.75 per cent.
The central bank had raised its policy interest rate by 25 basis points at its two previous meetings in April and June to keep inflation in check as the Iran war pushed energy prices higher.
“The measured increases in the policy rate will continue to anchor inflation expectations and mitigate the risk of further second-round effects,” the Bangko Sentral ng Pilipinas (BSP) said in a statement, adding it was prepared to take monetary policy action as needed to ensure that inflation returns to target.
Annual inflation slowed to 6.2 per cent in July from June’s 6.4 per cent rate due to lower transport costs.
Headline inflation had eased, although oil prices were volatile and the possible impact of severe conditions from the El Nino weather pattern on agricultural prices posed further upside risks to inflation, the BSP said.
The economy grew 2.3 per cent in the second quarter from a year earlier, its weakest pace since 2021, due to a slump in construction and softer domestic demand.
“Despite slow growth in the first half of 2026, the fundamentals for growth appear to be intact over the medium term,” the BSP said in its statement. “With the support of fiscal measures, growth is expected to strengthen in the second half of the year.”
The central bank next meets on Oct 22 to review policy. REUTERS
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