The Monetary Board raised the BSP’s target reverse repurchase rate by 25 basis points to 4.75 percent at its monetary policy meeting on 18 June 2026. Accordingly, the rates on the overnight deposit and lending facilities were adjusted to 4.25 percent and 5.25 percent, respectively. Read more

The inflation outlook deteriorated and significantly shifted upward in June 2026 due to the conflict in the Middle East. This reflects higher global oil and non-oil prices, as well as peso depreciation. Agricultural prices likewise rose due to increased fuel and fertilizer costs. Possible fare hikes and higher minimum wage adjustments in 2026 also contributed to the higher inflation path. Nevertheless, inflation could return close to the 3.0-percent target by 2028. Read more

Headline inflation eased to 6.8 percent in May 2026 from 7.2 percent in April 2026, driven by lower domestic petroleum prices following the moderation in global oil prices. Inflation for food items—specifically vegetables, fish, and meat—decelerated, supported by lower transport costs and improved supply conditions. Rice prices also declined, following the dry-season harvest. The May 2026 inflation outturn was below the BSP’s forecast range of 7.1–7.9 percent for the month. Read more

Economic policymakers often use theory-based equilibrium benchmarks, such as the natural rates of interest and unemployment, to distinguish long-term trends from cyclical fluctuations. In contrast, no comparable benchmark exists for capital flows, despite their pronounced volatility in emerging market economies, such as the Philippines. This is particularly relevant for portfolio investment (PI) liabilities, which are substantially more volatile than direct investment (DI). Establishing a theory-based benchmark for capital flows can, therefore, strengthen systemic risk monitoring and support more timely policy intervention. Read more