The Philippine central bank raised its benchmark interest rate by half a percentage point to 5.5% on Oct. 22, more than expected, to slow surging inflation and limit pressure on a weakening peso.
The Bangko Sentral ng Pilipinas (BSP) made its fourth consecutive rate increase. All 27 economists in a Reuters poll had expected a smaller, quarter-point rise. The target reverse repurchase rate is now 5.5%.
The overnight deposit and lending rates rose to 5% and 6%, respectively. Inflation rose to 7.2% in September from 6.1% in August, far above the central bank’s target range of 2% to 4%. Core inflation reached a three-year high of 4.7%.
The bank cited higher global oil prices and transport fare increases as risks that could push prices higher. It also cited possible El Niño damage to agricultural production as a risk that could push prices higher. The peso’s recent fall toward a record low has added to concern because it makes imported fuel and other goods more expensive.
The currency briefly rose after the rate decision before falling again. The BSP kept its 2026 inflation forecast at 6.1%. It raised its 2027 inflation projection from 5.4% to 6%.
It forecast inflation of 3.3% in 2028. Governor Eli Remolona said further rate increases remain possible. Higher borrowing costs could weigh on an economy that grew 2.3% in the second quarter.