RRP previously cut by a cumulative 50 basis points
The central bank had previously cut the RRP by a cumulative 50 basis points in December 2025 and February 2026 amid weaker-than-expected economic growth last year. Inflation also hovered near the lower end of the BSP’s 2 to 4 percent target range, giving policymakers room to ease policy. Turn to page 11
However, the escalation of the Middle East conflict early last month led to elevated fuel prices and transport costs, pushing headline inflation up by 1.7 percentage points to 4.1 percent in March.
The BSP now expects inflation to breach its 2 to 4 percent target range over the next two years, with projections reaching 6.3 percent in 2026 as energy-driven spillover effects spread to other goods and services.
Thursday’s move could end BSP’s easing cycle
Remolona said a 50-basis-point hike had been considered, noting that Thursday’s move could mark the end of the BSP’s easing cycle as fuel prices remain elevated, with diesel still in the triple-digit-per-liter range.
“This measured increase is intended to contain the build-up of spillover effects and keep inflation expectations anchored. It should still accommodate economic recovery in the near term,” he said.
The Monetary Board had convened off-cycle on 26 March to assess emerging risks from the conflict, opting at the time to keep rates steady given the limited effectiveness of monetary policy in addressing supply-side shocks. Remolona had earlier warned that a rate hike would be “painful,” citing a weak growth outlook for the year.
The BSP has since rolled out relief measures for borrowers and financial institutions to cushion the impact of the ongoing energy emergency on Filipinos.
