MANILA – The Bangko Sentral ng Pilipinas (BSP) said it would consider weakening economic growth alongside elevated inflation when deciding future interest rate adjustments, as the Philippine economy faces mounting pressure from rising consumer prices and slowing demand.
In a statement issued Wednesday evening, the central bank reaffirmed its commitment to maintaining price stability while supporting sustainable economic growth.
The Philippine economy expanded by just 2.1 percent in the third quarter of 2026, as high inflation continued to weaken household consumption and overall economic activity.
Inflation accelerated to 7.8 percent in October, exceeding the BSP’s 3 percent target and prompting the Monetary Board to raise its policy rate by another 50 basis points in October.
The BSP acknowledged that monetary policy cannot directly address inflation caused by global supply disruptions but can help contain their secondary effects on domestic prices and inflation expectations.
The central bank said it must balance efforts to control inflation with the risk of further weakening consumer spending and business activity.
“In the BSP’s efforts to bring inflation down, it takes important account of the weakness in aggregate demand. It is also mindful of the need to prevent the de-anchoring of inflation expectations,” the BSP said.
Despite the challenging economic environment, the central bank emphasized that restoring price stability remains essential to protecting household purchasing power, rebuilding confidence and supporting economic recovery.
The BSP said upcoming monetary policy decisions would depend on economic indicators, particularly inflation trends, inflation expectations and overall economic performance.
“We are carefully assessing the implications of the latest growth data for the inflation outlook. Future monetary policy decisions will continue to be guided by incoming data, particularly developments in inflation, inflation expectations, and economic activity,” it said.
The central bank identified easing inflation, stable price expectations, stronger consumer and business confidence, and improvements in investment and employment as key indicators of economic recovery.
It reiterated that monetary policy would remain focused on controlling inflation while creating conditions for sustained and balanced economic growth.
