MONETARY authorities could hike interest rates ahead of next month’s scheduled policy meeting, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said on Friday.
“It’s a toss-up whether we do an off-cycle, or we just wait for the regular meeting,” the central bank chief said in a television interview.
Last month’s 25-basis-point rate hike, Remolona said, “didn’t seem enough,” adding that policymakers were facing a big and persistent supply shock.
The BSP raised its key interest rate to 4.50 percent last April 23 to keep a lid on inflation. Its next policy meeting will be on June 18.
The central bank also held an off-cycle meeting on March 26, during which it kept the policy rate steady. It became the first central bank in Asia to do so, reflecting heightened concerns about the impact of the Middle East conflict on inflation and economic growth.
“Whatever we do, we want to convey the message that we’re trying to be proactive,” Remolona said. “We’re trying to stay ahead of the curve and that we’re serious about inflation.”
Highlights of the April policy meeting released late on Thursday, meanwhile, described the 25 bps hike as a “preemptive tightening” intended to anchor inflation expectations and contain second-round effects.
“While a more restrictive stance may be warranted, the [BSP’s policymaking Monetary Board] formed a broad consensus that a measured preemptive increase is appropriate to anchor inflation expectations and contain second-round effects,” it said.
First-round effects of the Middle East were already being felt after the March off-cycle meeting, the BSP said, with inflation topping the 2.0- to 4.0-percent target at 4.1 percent from just 2.4 percent in February.
Second-round effects were also starting to build up, with fertilizer prices increasing, transport groups calling for fare hikes and a review of minimum wages in the National Capital Region set to start in May.
“Based on the 2022 inflation episode during the Russia-Ukraine conflict, second-round effects manifest about two quarters after an oil price shock,” the BSP noted.
Economic growth was seen remaining soft this year but improving in 2027, with government measures expected to mitigate the adverse impact of the Middle East war.
This view, however, came before the release of data showing that growth had slumped to 2.8 percent in the first quarter, slowing further from the 3.0 percent — blamed on the impact of a massive flood control project scandal — seen in the last three months of 2025.
The first-quarter result was well below the government’s 2026 target of 5.0-6.0 percent, a revision made in December in the wake of the corruption mess that could be further lowered this year.
