EL7.AI
Central BanksMedium•25 October 2026•
4 min read

Philippine Central Bank Raises Rate by 50 Basis Points to 5.50% in Fourth Straight Hike

Key Facts

1The Philippine central bank raised its target rate by 50 basis points to 5.50% on October 22, 2026.
2Headline inflation accelerated to 7.2% in September from 6.1% in August, while core inflation came in at 4.7%.
3The Philippine economy grew 2.3% year on year in the second quarter, its weakest pace since 2021.
420 of 22 economists expected a 25-basis-point hike to 5.25% before the meeting.
5The central bank’s next meeting is scheduled for December 17, 2026.

Bangko Sentral ng Pilipinas raised its target reverse repurchase rate by 50 basis points to 5.50% on October 22, 2026, its fourth consecutive hike, according to a central bank statement. The move was double the increase most economists had expected before the meeting, as annual inflation accelerated to 7.2% in September. The bank said its decision aims to contain the second-round effects of rising prices and anchor inflation expectations. It also left the door open to further monetary action if needed. The decision brought total tightening since April to 100 basis points, according to Reuters.

September data showed headline inflation accelerating to 7.2% from 6.1% in August, while core inflation came in at 4.7%, according to data reported by Philstar. Average inflation from January to September 2026 was about 5.4%, compared with an annual rate of 1.7% in September 2025, according to the Philippine Statistics Authority. That reading formed part of the backdrop to the decision, as the central bank said inflation was likely to rise further in the coming months. The bank expected average headline inflation to remain elevated in 2027. It then forecast that inflation would approach its 3.0% target in 2028.

Price pressures came from several groups: food and non-alcoholic beverages contributed 2.6 percentage points to September inflation, housing, water, electricity, gas and other fuels contributed 1.7 points, and transport contributed 1.3 points, according to the statistics authority. The central bank said higher global oil prices came amid renewed tensions in the Middle East. It also cited the latest increase in transport fares as one of the upside risks to inflation. It added that El Niño conditions continued to threaten agricultural output and prices. In its statement, the bank said, "Renewed tensions in the Middle East pushed global oil prices higher," linking external pressures to local living costs.

The size of the increase surprised most participants in a poll conducted before the meeting: 20 of 22 economists expected a 25-basis-point hike to 5.25%, while two economists forecast a larger 50-basis-point increase, according to a BusinessWorld poll published by Metrobank Wealth Insights. Reuters reported that all 27 economists it surveyed expected a 25-basis-point increase. Some analysts said continued pressure on the peso or El Niño risks could justify a bigger move to curb inflation and anchor expectations. The actual move was double the increase favored by most poll respondents. The 50-basis-point hike was larger than the path most had expected before the meeting.

The tightening comes as economic activity slows: the Philippine economy grew 2.3% year on year in the second quarter of 2026, its weakest pace since 2021, amid a decline in construction and weak domestic demand, according to Reuters. Performance was split between growth of 2.7% in agriculture, forestry and fishing and 4.5% in services, against a 2.4% contraction in industry, according to the statistics authority. On the expenditure side, household consumption growth slowed to 2.8%, while gross capital formation fell 9.2% year on year. These figures put the rate hike in the context of an economy that has lost some momentum as price pressures widen. The bank aims to curb the pass-through of those pressures to prices and expectations, while second-quarter data point to weakness in demand and investment.

After the decision, the Philippine peso rose to 63.311 against the U.S. dollar, according to Reuters. The central bank scheduled its next monetary policy review meeting for December 17, 2026. The bank said it was prepared to take additional monetary action if needed, without setting out a numerical path for future decisions in its statement. The next meeting comes after the bank forecast that inflation would remain elevated in 2027 and approach its 3.0% target in 2028. Price expectations and risks related to oil, transport and agriculture will be among the factors the bank cited in its latest decision.