Philippine Central Bank Raises Policy Rate to 4.5% as Middle East Crisis Pushes Inflation to 4.1%

Gate News message, April 23 — The Bangko Sentral ng Pilipinas (BSP), the Philippines' central bank, raised its policy rate to 4.5% on April 23, marking the first rate hike in two years amid escalating Middle East tensions that have driven up domestic fuel and food prices.

Inflation in the Philippines surged to 4.1% in March, nearly doubling from the previous month as oil prices climbed due to the regional conflict. BSP Governor Eli Remolona Jr. stated the central bank's inflation outlook has "deteriorated," with higher oil and fertilizer costs expected to spill over into food and service prices. The bank raised its 2026 inflation forecast to 6.3% and 2027 forecast to 4.3%. The government declared a national energy emergency in late March as the conflict threatened energy supply stability.

Central banks typically use policy rate adjustments to control inflation; higher rates increase borrowing costs and reduce spending. Remolona noted that policy rate effects usually take about one year to fully materialize, though larger moves may show faster impact. The bank's Monetary Board deemed preemptive action necessary to safeguard price stability.