The country’s Monetary Board kept its key interest rate unchanged at 4.25 percent, saying it is closely watching rising inflation risks and uncertain global conditions.
Officials said the ongoing conflict in the Middle East has driven up global prices of oil and fertilizer. This has already led to higher fuel costs and transport fares locally.
According to latest projections from the Bangko Sentral ng Pilipinas (BSP), inflation may go beyond the 4 percent target in 2026 but is expected to return to the desired range by 2027. Despite this, public expectations for inflation remain stable.
The Board noted that current inflation pressures are mainly due to supply issues, which interest rate changes cannot easily control. At the same time, economic growth is expected to remain weak in 2026, and raising rates now could slow recovery.
The BSP said it will continue to monitor developments closely and remain ready to act if needed to keep prices stable, especially if rising costs start to spread more widely across the economy.
