The latest increase extends the BSP's unexpected tightening cycle after officials spent much of last year projecting that 2026 would be a year of policy rate cuts. However, renewed inflation pressures, including higher global oil prices following the Iran conflict, forced the central bank to reverse course.
Finance Secretary Frederick Go’s entry into the Monetary Board of the Bangko Sentral ng Pilipinas is more than a routine leadership change. It strengthens the policy bridge between Malacañang’s fiscal agenda and the central bank’s monetary decisions at a time when alignment between the two has become increasingly critical.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. on Tuesday signaled limited room for further policy rate adjustments in 2026 despite a benign inflation rate environment, reiterating the regulator’s mantra that any adjustment will be data dependent.
The central bank chief cited a “benign” inflation outlook that remains well within its target range and said inflation expectations “remain well-anchored.” With price pressures easing, policymakers saw room to support economic activity without threatening price stability.
BSP Governor Eli Remolona Jr. said the Monetary Board adjusted the overnight deposit and lending rates to 5 percent and 6 percent, respectively, reflecting the central bank’s shift toward a more accommodative stance, following months of stable price movements.
Bank of the Philippine Islands lead economist Emilio Neri Jr. said that the BSP has room for further monetary easing in the first half of 2025, provided no significant supply shocks disrupt the inflation trajectory.