BSP raises key interest rate by 25 basis points to 4.75% in June 2026

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MANILA, Philippines — The Bangko Sentral ng Pilipinas' (BSP) Monetary Board has raised its target reverse repurchase rate (RRP) by 25 basis points to 4.75% in June 2026, citing "strong" inflationary pressures.

This is the second time in 2026 that the Monetary Board has raised its RRP. The last increase was also by 25 basis points in April 2026, bringing the rate to 4.50%.

With the adjustment this month, the interest rates for overnight deposit and lending facilities were also adjusted upward to 4.25% and 5.25%, respectively.

Monetary authorities noted that inflationary pressures within the economy remain strong, heavily driven by global oil and fertilizer costs that continue to push domestic food and fuel prices higher.

According to the Monetary Board, rising core inflation indicates that price pressures are broadening and triggering second-round effects, including elevated inflation expectations across sectors.

The central bank's latest projections also showed that the country is now facing a higher inflation path.

"Average headline inflation is seen to breach the 4.0-percent tolerance ceiling in both 2026 and 2027. For 2028, inflation is seen to settle slightly above the 3.0-percent target," the BSP said.

Weighing these risks, the BSP said that the central bank's policy action aims to keep long-term inflation expectations anchored while mitigating the risks of secondary price spikes.

Additionally, the tightening is expected to complement active fiscal measures implemented by the government to support steady consumer spending and reinforce overall business sentiment.

"The Monetary Board will continue to be guided by incoming data and is prepared to take further monetary action as needed to ensure that inflation returns to the 3.0-percent target," the BSP's statement read.