Philippine Central Bank Raises Key Interest Rate to 4.5% Amid Middle East Conflict

The Bangko Sentral ng Pilipinas (BSP) raised the country's key interest rate to 4.5% on April 23, 2026, in response to elevated inflation driven by the ongoing conflict in the Middle East. This adjustment represents a 0.25 percentage point increase from the previous rate of 4.25%.

The decision was made during a Monetary Board meeting in Manila, Philippines. BSP Governor Eli Remolona Jr. stated that the central bank's inflation outlook has worsened due to the conflict's effects on domestic fuel and food prices. He noted that higher oil and fertilizer prices are expected to affect food prices and services.

Additionally, core inflation is increasing, indicating risks of demand-driven inflation.

in March 2026 rose to 4.1%, nearly double the previous level, primarily due to higher fuel costs impacting food and transport prices. The BSP revised its inflation forecast for 2026 to 6.3% and for 2027 to 4.3%. In late March, the government declared a national energy emergency amid concerns over energy supply stability related to the conflict.

“Higher oil and fertilizer prices are expected to spill over to food prices and services. Core inflation is rising, highlighting the risk of demand-driven inflation." — BSP Governor Eli Remolona Jr. The BSP stated that the Monetary Board considered preemptive action necessary to maintain price stability. explained that the effects of rate changes may take up to one year to fully materialize, though significant shifts could shorten this lag. In a March off-cycle meeting, the BSP maintained rates at 4.25%, as fiscal policy impacts were unclear at the time. Remolona Jr. indicated increased confidence that government spending would become more stimulative, following efforts to control expenditures. This rate hike is the first tightening in two years, aimed at addressing the deteriorating inflation environment.”