- Decision
- Lower
- Rate change
- 25 bps
- target reverse repurchase rate
- 5.5%
The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) cut the Target Reverse Repurchase (RRP) Rate by 25 bp to 5.50 percent at its 10 April 2025 policy meeting, citing a “more manageable” inflation outlook and emerging downside risks to growth from a weaker global economy. After leaving the rate unchanged at 5.75 percent in February, the Board’s first reduction lowers the overnight deposit and lending facility rates to 5.0 percent and 6.0 percent, respectively. Risk-adjusted inflation projections have been revised down to 2.3 percent for 2025, 3.3 percent for 2026 and 3.2 percent for 2027, with expectations still within target and overall risks now “broadly balanced”; upside pressures stem from transport, meat and utility costs, while lower rice import tariffs and subdued global demand are disinflationary. The Board warned that a “more challenging” external environment could dampen domestic activity and signalled it will adopt a measured, data-dependent approach to any further easing to maintain price stability supportive of sustainable growth and employment.
Rate evolution
Over the period, the Central Bank of the Philippines lowered the Target Reverse Repurchase (RRP) Rate by a net 25 basis points to 5.0%, initially easing from 5.25% to 4.25%, signalling late in 2025 that easing was nearly over, pausing in March 2026 and then reversing course with increases from April. The earlier cuts reflected a moderated then benign inflation outlook and well-anchored expectations, which gave room to support activity as United States trade-policy uncertainty weighed on global growth and, later, weaker domestic demand and business sentiment were linked to governance concerns over infrastructure spending, even as the Board flagged pressure from oil, electricity and rice tariffs.
Amid uncertainty, it held the policy rate at 4.25% in March 2026 as Middle East oil and fertilizer shocks were seen as supply-led and tightening could delay recovery, then raised it to 4.50% in April as fuel and food price pass-through, rising core inflation, projections above the 4.0% tolerance ceiling in 2026 and 2027, and higher expectations pointed to more persistent pressures. On 17 June, the Board increased the rate to 4.75% as elevated global oil and fertilizer prices continued to drive domestic fuel and food prices, core inflation signalled broader pressures and second-round effects, and projections showed headline inflation breaching the ceiling in 2026 and 2027 and settling slightly above the 3.0% target in 2028.
On 26 August, it raised the rate by another 25 basis points to 5.0%, judging that volatile oil prices, the possible impact of severe El Niño conditions on agricultural prices, potential wage adjustments and broadening core price pressures required preemptive action, even as headline inflation had eased. Average headline inflation was still seen breaching the tolerance ceiling in 2026 and 2027 before settling close to target by 2028, while the Board said measured rate increases would anchor expectations and mitigate second-round effects and remained prepared to act as warranted.