The Bangko Sentral ng Pilipinas (BSP) has raised its key interest rate by 0.25 percentage points to 4.5%, along with increases in its lending and deposit rates. The move is aimed at slowing the rise in prices.
The central bank said inflation is becoming more difficult to manage due to higher global oil and fertilizer prices, partly driven by the ongoing conflict in the Middle East. These higher costs are already affecting fuel and food prices in the Philippines. At the same time, core inflation is rising, meaning price increases are spreading across more goods and services. The BSP now expects inflation to go beyond its target range in 2026 and 2027 if no action is taken.
For households, the rate hike means borrowing will likely become more expensive. Interest on loans such as housing, car, or personal loans may increase, and carrying credit card balances could cost more. Families may continue to feel pressure on their budgets as prices of basic goods remain elevated. However, the BSP’s action is intended to prevent inflation from worsening and to protect consumers’ purchasing power over time.
For businesses, higher interest rates can make it more costly to borrow money for expansion or day-to-day operations. This could lead some companies to delay investments or manage expenses more carefully, especially if consumer demand slows. Still, the BSP emphasized that the increase is gradual and designed to control inflation without significantly harming economic growth.
Overall, the BSP said it is trying to balance the need to curb rising prices while supporting the economy. It will continue to monitor developments and stands ready to take further action to bring inflation back to its 3 percent target.
