The Bangko Sentral ng Pilipinas (BSP) raised its target reverse repurchase rate by 50 basis points to 5.50% on Oct. 22 as Philippine inflation climbed to 7.2% in September, Reuters reported.
The move was twice the 25-basis-point increase expected by all 27 economists in Reuters’ poll, the news agency reported. Dow Jones, citing a separate survey by The Wall Street Journal, said all 11 economists expected a hike, but only one expected a 25-basis-point increase. The rate was 5.00% after a 25-basis-point increase on Aug. 27, according to the BSP’s August policy briefing. Dow Jones also reported that the overnight lending rate rose to 6.00% from 5.50% after the decision.
The Philippine Statistics Authority (PSA) reported that year-over-year headline inflation rose from 6.1% in August to 7.2% in September. Core inflation increased to 4.7% from 4.1%. The agency identified food and non-alcoholic beverages, up 6.7%; housing, water, electricity, gas and other fuels, up 8.4%; and transport, up 14.6%, as major upward drivers.
September’s inflation rate was more than twice the BSP’s 3.0% target, identified in its August policy briefing. Reuters reported that the Monetary Board cited widening price pressures and additional upside risks in its decision. The BSP said it aimed to “firmly anchor inflation expectations,” Reuters reported.
The BSP left its 2026 average inflation projection at 6.1% and raised its 2027 projection to 6.0% from 5.4%, according to Reuters. The news agency linked the higher outlook to elevated global oil prices and El Niño risks. Reuters also reported a 3.3% forecast for 2028. The 2026 and 2027 forecasts both exceed the BSP’s 3.0% target.
BSP Governor Eli Remolona said, “We remain open to further interest rate hikes,” Reuters reported. The central bank’s next Monetary Board policy meeting is scheduled for Dec. 17, 2026, according to its calendar.
