Economists expect another BSP rate hike as inflation and peso weakness persist

Floyd Brenz., Philippine Canadian Inquirer
October 19, 2026

Photo Courtesy: BSP

The Bangko Sentral ng Pilipinas (BSP) is expected to raise interest rates again this week as persistent inflation and the peso’s continued weakness intensify pressure on monetary policymakers.

All 20 economists surveyed by the Philippine Daily Inquirer expect the central bank’s Monetary Board to tighten monetary policy at its October 22 meeting, reflecting concerns over rising prices and mounting economic risks.

Most forecasts point to another 25-basis-point increase, which would bring the benchmark policy rate to 5.25 percent from its current 5 percent. A larger adjustment remains a possibility as policymakers weigh the need to contain inflation against the risks of further slowing economic activity.

Inflation has become a major concern after consumer prices accelerated to 7.2 percent in September, up from 6.1 percent in August and well above the BSP’s target range of 2 to 4 percent.

The peso’s depreciation has added to the pressure, as a weaker currency can make imported goods, fuel and other essential commodities more expensive. Higher global energy prices and potential disruptions to food supplies also threaten to prolong inflationary pressures.

However, further rate increases could make loans more expensive for households and businesses, potentially dampening consumption, investment and economic growth.

The Monetary Board’s decision will therefore hinge on balancing the need to prevent inflation from becoming entrenched against signs of weakness in domestic demand. Its upcoming meeting comes as policymakers face growing pressure to stabilize prices while limiting the impact of tighter monetary policy on the Philippine economy.