Philippines , April 10, 2025
The Bangko Sentral ng Pilipinas (BSP) raised interest rates once again this week, increasing the benchmark rate by 25 basis points to 6.75%, in a decisive move to combat persistent inflation. This marks the central bank’s fourth rate hike in the past 12 months, as consumer prices continue to pressure household budgets and small business operations.
Inflation in the Philippines remained stubbornly high at 6.1% in March 2025, driven by rising food, fuel, and transportation costs. According to BSP Governor Eli Remolona Jr., the rate hike was necessary to anchor inflation expectations and signal the bank’s commitment to monetary stability.
“While growth momentum remains intact, we must act to ensure price stability, particularly for vulnerable segments of our population,” Remolona said during a press briefing.
The decision has drawn mixed reactions. Small and medium enterprises (SMEs), still recovering from pandemic-related losses, warn that the higher borrowing costs may hinder expansion and hiring. “Access to affordable credit is already tight. Another rate hike makes survival harder,” said Carla Mendoza, who runs a mid-sized logistics firm in Manila.
Analysts note that the BSP’s move mirrors monetary tightening in Vietnam and Indonesia, where central banks are similarly reacting to external shocks, currency pressures, and geopolitical instability. However, some economists believe that the Philippines faces a more acute inflation challenge due to its higher dependence on imports and remittance-driven consumption.
The BSP hinted at a possible pause in future rate hikes depending on global commodity price movements and domestic inflationary pressures. Nonetheless, many expect elevated rates to persist throughout 2025, especially with uncertainty looming over U.S. Federal Reserve policy and crude oil markets.
