BSP Says No Interest Rate Cuts Yet as Inflation Could Breach 8% — What It Means for Borrowers
BSP INTEREST RATE 2026 – Filipinos hoping for cheaper loans may have to wait longer after the Bangko Sentral ng Pilipinas (BSP) said it is not yet considering cutting interest rates, with inflation expected to stay high in the coming months.
“Easing? Not yet. We’re still in a tightening cycle, so we don’t know,” BSP Governor Eli Remolona Jr. told reporters on Tuesday, November 3, on the sidelines of a European Chamber of Commerce of the Philippines (ECCP) event, The Philippine Star reported. He also declined to say whether the tightening could stretch into 2027, saying future moves will depend on incoming data.
Where the BSP Policy Rate Stands Now
The Monetary Board raised its benchmark rate by 50 basis points to 5.50 percent on October 22, its fourth hike this year. Based on reports from The Philippine Star and BusinessMirror, here is a quick look at the BSP’s moves in 2026:
- April 23 – 25 basis point hike
- June 18 – 25 basis point hike
- August 27 – 25 basis point hike
- October 22 – 50 basis point hike, bringing the policy rate to 5.50 percent
- Total – 125 basis points in increases since the tightening resumed
- Next policy meeting – December 17, 2026 (the last for the year)
The policy rate influences borrowing costs across the economy. Higher rates are meant to slow spending and demand to help tame inflation, but they also tend to make bank loans, credit cards and other forms of credit more expensive.
Inflation Could Go Above 8 Percent
BSP Deputy Governor Zeno Ronald Abenoja said inflation could stay elevated in the coming months and may even breach 8 percent due to higher food and energy prices. “There’s a chance. We’re looking at those possibilities,” he said.
The central bank earlier projected October inflation at 7.1 to 8.1 percent, up from 7.2 percent in September. The Philippine Statistics Authority (PSA) is set to release the official October inflation figure on Thursday, November 5.
According to The Manila Times, the BSP kept its 2026 inflation forecast at 6.1 percent but raised its 2027 forecast to 6 percent from 5.4 percent. Its 2028 estimate stays at 3.3 percent.
What Will Make the BSP Stop Hiking Rates?
Remolona said the BSP’s policy is “forward-looking,” and the central bank would be more comfortable ending its tightening once headline and core inflation show a sustained improvement toward the 2 to 4 percent target. He stressed that the BSP watches core inflation closely.
Economic growth will also be considered. Remolona explained that if the output gap – the difference between the country’s actual and potential growth rate – turns out to be “too negative,” the BSP is less likely to tighten further. The PSA will release third-quarter GDP data on November 9. The economy grew only 2.3 percent in the second quarter, slower than the 2.8 percent in the first quarter.
The BSP chief said he expects the economy to recover by the fourth quarter of this year or the first quarter of 2027 as the government speeds up spending. Asked about a possible off-cycle move before December 17, he said, “It depends. We’re still waiting for a lot of data.”
Peso Watch
Remolona also said the BSP does not like sharp peso depreciation because a weaker currency makes imported goods and fuel more expensive. The peso hit a record low of 64.17 against the US dollar on October 27 before recovering to the 63 level. Asked how active the BSP is in the foreign exchange market, he said, “We go in and out.”
What This Means for Borrowers
- Do not expect lower interest rates on new bank loans in the near term while the BSP remains in tightening mode.
- Those with variable or repricing loans, such as some home and auto loans, should check with their bank when their rate will next be reviewed.
- Compare rates from different lenders, including government programs like Pag-IBIG and SSS loans, before borrowing.
Are you planning to apply for a loan this year? Check out today’s USD to PHP exchange rate to see where the peso stands.
