The Monetary Board reduced the BSP’s target reverse repurchase rate by 25 basis points to 4.25 percent at its monetary policy meeting on 19 February 2026. Accordingly, the rates on the overnight deposit and lending facilities were adjusted to 3.75 percent and 4.75 percent, respectively. Read more

Inflation is projected to settle at 3.6 percent in 2026 and 3.2 percent in 2027, higher than in the previous round and above the 3.0 percent point target. The upward revision largely reflects the impact of supply‑side factors, including higher global oil and non‑oil prices, higher rice tariffs, and electricity rate adjustments. The higher‑than‑expected inflation outturns in December 2025 and January 2026 also contribute to the elevated path. Read more

Headline inflation increased to 2.0 percent in January 2026 from 1.8 percent in December 2025. Inflation for non‑food items drove the uptick, specifically housing, water, electricity, gas, and other fuels, as well as restaurants and accommodation services. Moderate price increases were also observed for selected food products, particularly vegetables, meat, and fish. Rice prices continued to decline following the import ban in Q4 2025. The January 2026 inflation outturn was within the BSP’s month‑ahead forecast range of 1.4–2.2 percent. Read more

The Bangko Sentral ng Pilipinas (BSP) operates an inflation targeting framework anchored in a clear numerical objective. For 2025 to 2028, the inflation target is set at 3.0 percent, with a tolerance band of ±1.0 percentage point (ppt).

While often expressed as “3.0 percent ±1.0 percentage point,” this formulation combines two distinct elements—the point target and the tolerance band—which play different but complementary roles within the framework. Read more

Expectation surveys conducted by the Bangko Sentral ng Pilipinas (BSP) in Q3 and Q4 2025 reveal worsening economic sentiment, driven by concerns about government infrastructure and corruption. This is evident in delays in businesses’ expansion plans and in households’ intentions to make major purchases. The decline in confidence could have contributed to the economy’s lackluster performance in Q4 2025. Without substantial reforms, deteriorating economic sentiment, coupled with reduced government spending, is expected to continue constraining overall output growth. Therefore, policymakers must assess the concrete economic costs of this decline in confidence and determine the potential duration of the adverse impact of sentiment shocks. Read more

The effectiveness of the Bangko Sentral ng Pilipinas (BSP)’s monetary policy in influencing key macroeconomic variables, such as inflation and gross domestic product growth, largely depends on the pass-through of changes in the target reverse repurchase (RRP) rate to bank lending rates. This is particularly relevant in the Philippines, where the financial system is largely bank-centered, with banks accounting for 83 percent of total assets. This study examines the speed and magnitude with which changes in the BSP’s target RRP rate transmit to the broader interest rate landscape. While the BSP aims to steer the cost of funds to influence economic decisions, Mishkin (1995) asserts that transmission is neither linear nor automatic. Read more