EL7.AI
ForexMedium•27 October 2026•
3 min read

Philippine central bank raises rate to 5.50% as inflation pressures mount and peso weakens

Key Facts

1The Bangko Sentral ng Pilipinas raised its target reverse repurchase rate by 50 basis points to 5.50%.
2Headline inflation accelerated to 7.2% in September from 6.1% in August 2026.
3Gross international reserves stood at 99,494.2 million dollars in September, down 8.8% year on year.
4The bank expects average inflation to remain elevated in 2027 and approach its 3.0% target in 2028.

The Bangko Sentral ng Pilipinas raised its target reverse repurchase rate by 50 basis points to 5.50% in a move it said was aimed at addressing broadening price pressures and inflation risks. The bank said overnight deposit and lending rates now stand at 5.00% and 6.00%, respectively. The decision comes as the Philippine peso continues to fall to record lows against the dollar. But the central bank sees no need at present to defend the currency, according to the position reported by the Philippine Star. The bank governor said, according to the report, that intervention depends on the bank’s assessment of when currency moves become inflationary.

Headline inflation accelerated to 7.2% in September 2026, from 6.1% in August, according to data from the Philippine Statistics Authority. Average inflation reached 5.4% from January to September. The acceleration puts price pressures at the center of the bank’s explanation for its monetary decision, rather than tying the increase to a target exchange rate. The bank governor had said a rate hike was not aimed at defending a particular level for the peso, according to the Philippine Star’s report on the policy decision. This reflects the bank’s distinction between tackling inflation and intervening in the foreign exchange market.

The bank attributed upside inflation risks to higher global oil prices amid renewed tensions in the Middle East, as well as the recent increase in transport fares. It also said El Niño conditions continue to threaten agricultural output and prices. These factors combine external energy-related pressures with domestic pressures on transport and agricultural supplies. The bank said inflation could accelerate in the coming months, with its average remaining elevated in 2027. The price trajectory outlined by the bank points to an ongoing challenge in containing inflation after the latest rate increase.

The Philippines’ gross international reserves stood at 99,494.2 million dollars in September 2026, down 8.8% year on year, according to central bank data. In its rate decision statement, the bank said it stands ready to take further monetary policy action as needed to ensure inflation returns to target in a timely manner. The bank expects average inflation to remain elevated in 2027, then approach its 3.0% target in 2028. These forecasts place the inflation path in coming years among the factors shaping monetary policy, alongside monitoring the peso’s movements. The bank did not specify a date for further action in the statement, but kept the option of monetary action open if needed.