THE Philippine economy remains resilient enough to withstand further interest rate hikes should inflationary pressures warrant additional tightening, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said.
“The real interest rate is still negative,” Remolona told reporters on Monday, with inflation — at an above-target 6.8 percent as of May — higher than the policy rate of 4.75 percent.
The BSP’s policymaking Monetary Board has raised key interest rates twice so far this year in response to inflationary pressures, with the latest a 25-basis point hike last month.
Pressed further on how many additional 25-basis-point increases the economy can withstand, Remolona replied that future policy decisions would not depend solely on inflation.
“Our formula doesn’t only take inflation into account. It also includes growth,” he said.
The BSP chief expects economic growth to accelerate in the second half as government spending normalizes after delays earlier this year.
He attributed the slower pace of growth — a below-target 2.8 percent in the first quarter — mainly to restrained public spending following tighter scrutiny of flood-control projects.
“The problem this year is the government spending,” Remolona said, but added that the government’s catch-up spending program should help restore the pace of public expenditures.
He expects economic growth to exceed 3.0 percent in the second half of 2026, noting that as the country’s strong economic fundamentals continue to attract investor confidence, the benefits of growth should become more widely felt by ordinary Filipinos.
“We have good fundamentals in place. So we can build on that,” Remolona said. “We have to sustain the growth. We have to try to reduce inequality and poverty.”
In a separate briefing, Socioeconomic Planning Secretary Arsenio Balisacan said the economy should grow by 3.7 percent in the coming quarters to be able to achieve the lower end of the downwardly-revised 2026 target range of 3.5 percent.
“For the three quarters, for us to achieve the 3.5 target for the year, the average for the last three quarters must be 3.7 percent,” the Department of Economy, Planning and Development said.
“And for us to achieve the 4.5 percent (goal), the average for the last three quarters must be 5.07 percent,” he added.
The interagency Development Budget Coordination Committee, which slashed the 2026 target to 3.5-4.5 percent from 5.0-6.0 percent previously, is aiming for 5.0-6.0 percent annual growth from 2027 to 2030.
