Philippines Central Bank Delivers Jumbo Hike in Bid to Combat Inflation

By Amanda Lee

The Philippine central bank raised interest rates by more than expected Thursday, warning that inflation would accelerate further as renewed Middle East tensions pushed up energy prices.

Bangko Sentral ng Pilipinas raised its benchmark overnight reverse repurchase rate by 50 basis points to 5.50% from 5.00%. It increased its overnight lending rate to 6.00% from 5.50%.

All 11 economists surveyed by The Wall Street Journal had expected the BSP to raise rates by 25 basis points. Thursday's decision brings the central bank's total rate increases since April to 125 basis points.

"Inflation is seen to accelerate further in the coming months," it said, as it projected inflation to remain high in 2027 and approach its 3% target in 2028.

"Renewed tensions in the Middle East have driven global oil prices higher," it said.

Like many other energy importers, the Philippines had to react quickly to the oil shock caused by the outbreak of war in the Middle East in late February.

Before the conflict sent global energy prices soaring and disrupted commodities markets, the BSP had been in a cutting cycle, lowering rates to buoy weakening growth.

Write to Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

October 22, 2026 02:58 ET (06:58 GMT)