- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 4.25%
The Bangko Sentral ng Pilipinas (BSP) Monetary Board kept the Target Reverse Repurchase (RRP) rate unchanged at 4.25 percent at its 25 March 2026 meeting, judging that raising rates now could further dampen already weak economic growth while inflation pressures stem mainly from supply shocks linked to the Middle East conflict’s impact on global oil and fertilizer prices. The pause follows a cumulative 150-basis-point easing cycle delivered in six 25-bp steps between April 2025 and February 2026. Latest BSP forecasts show headline inflation breaching the 4.0 percent ceiling in 2026 before easing back within the tolerance range in 2027, while expectations remain well anchored; the Board nonetheless flagged upside risks from higher fuel costs and transport fares against a backdrop of soft domestic demand. The conflict-driven surge in commodity prices is filtering through to domestic fuel costs, intensifying near-term price pressures. The Board pledged continued vigilance and said it stands ready to act to counter any second-round effects and safeguard price stability.
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.