At its monetary policy meeting Thursday, the Monetary Board decided to raise the BSP’s Target Reverse Repurchase (RRP) Rate by 25 basis points to 5 percent.

The interest rates on the overnight deposit and lending facilities were adjusted to 4.5 percent and 5.5 percent, respectively following a meeting of the Monetary Board. It was the third straight increase in policy rates this year.

BSP Governor Eli Remolona Jr. said in a press briefing that although headline inflation has eased, '' core inflation remains above the tolerance range, reflecting the second round effects.''

He described the move as ''pre-emptive'' due to risks arising from volatile high prices, the El Nino weather phenomenon,,

''The possible impact of severe El Niño conditions on agricultural prices pose further upside risks to inflation. Potential wage adjustments also warrant close monitoring, including their implications for broader price setting and second-round effects. These underlying price risks require preemptive monetary action,'' said Remolona.

Remolona said ''average headline inflation is still seen to breach the 4.0-percent tolerance ceiling in 2026 and 2027.''

He added that despite slow growth in the first half of 2026, the fundamentals for growth appear to be intact over the medium term. With the support of fiscal measures, growth is expected to strengthen in the second half of the year. PHS