In a move that caught markets off guard, the Bangko Sentral ng Pilipinas (BSP) hit the pause button during an unscheduled meeting on Thursday.
Despite a looming oil shock, the central bank kept its key interest rate steady at 4.25 percent.
With the next official review not due until April 23, BSP Governor Eli Remolona Jr. explained that the team couldn’t wait: “Data is so different now,” he noted, citing how surging commodity prices have flipped the script on inflation.
Usually, when prices spike, central banks raise rates to cool things down. But this time, the BSP is playing a more nuanced game.
“Normally, with inflation going where it’s going, we would have hiked. But because it was driven by supply shocks, we felt a hike wouldn’t do very much,” Remolona said.
With the economy already feeling the squeeze, Remolona was candid about the risks of aggressive tightening: “To raise rates at this time would be painful.”
The reality of $85-per-barrel oil has forced a major rewrite of the country’s economic roadmap. The BSP now sees inflation spiking to 5.1% from 3.6% in 2026, and settling at 3.8% in 2027.
