BSP Raises Key Rate to 4.5% as Inflation Risks Intensify

Business | Economics Posted on 2026-04-24 00:29:48

MANILA – The Bangko Sentral ng Pilipinas (BSP) has increased its benchmark policy rate by 25 basis points to 4.5 percent, responding to mounting inflationary pressures tied to the ongoing conflict in the Middle East.

Following the adjustment, interest rates for the overnight deposit and lending facilities were set at 4 percent and 5 percent, respectively. This marks the central bank’s first rate hike since October 2023.

BSP Governor Eli Remolona Jr. explained that the decision was driven by a worsening inflation outlook. He noted that rising global oil and fertilizer costs—linked to geopolitical tensions—are expected to push up prices of food and services.

He also highlighted an uptick in core inflation, signaling stronger demand-side pressures. According to Remolona, headline inflation is now projected to exceed the BSP’s target range not only this year but potentially through 2027. Inflation expectations are likewise increasing, raising concerns they could drift away from the central bank’s target.

Deputy Governor Zeno Abenoja shared updated forecasts, estimating inflation to average 6.3 percent in 2026 and 4.3 percent in 2027. These projections reflect broader price increases across various sectors of the economy.

The BSP said the Monetary Board opted for a timely and measured response to prevent further spillover effects and keep inflation expectations in check, while still supporting economic recovery over the medium term.

Remolona assured the public that the central bank remains committed to taking necessary steps to steer inflation back toward its 3 percent target.

NPO News Team | PNA - PR

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