The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has decided to increase the target reverse repurchase (RRP) rate by 25 basis points, bringing it to 4.75 percent. Accompanying adjustments were also made to the interest rates for overnight deposit facilities (4.25 percent) and overnight lending facilities (5.25 percent).
This policy move comes as inflationary pressures remain persistent. Elevated global prices of oil and fertilizer continue to push up domestic costs for fuel and food items. The rise in core inflation further signals that price increases are spreading across the economy, alongside growing inflation expectations among consumers and businesses.
Updated economic projections show that average headline inflation is expected to exceed the 4.0 percent tolerance limit in both 2026 and 2027. For 2028, inflation is forecast to stay slightly above the 3 percent medium-term target range.
In response, the Monetary Board determined that tightening monetary policy is necessary. This action aims to keep public expectations of future price increases stable and reduce the risk of sustained price effects. The adjusted rate will also work alongside government fiscal measures to support stable household spending and improve business confidence.
The BSP said that it will closely monitor incoming economic data and stands ready to implement additional policy measures if required, to ensure inflation returns to the target level of 3 percent over the medium term.
