Your next car loan, mortgage, or credit line just got a little more expensive. The Bangko Sentral ng Pilipinas raised its key interest rate again on Thursday, stretching a tightening run that now touches every Filipino who borrows and every peso they save.
What the BSP just did
The Monetary Board raised the target reverse repurchase rate to 5% from 4.75%, the third consecutive increase since April. In the same move, the overnight deposit facility rose to 4.5% and the overnight lending facility to 5.5%. Taken together, the central bank has now lifted its benchmark rate by 75 basis points since April.
Why it is hiking
The pivot reverses the message officials delivered for much of last year, when the BSP projected 2026 as a year of rate cuts. Instead, renewed inflation pressures, including higher global oil prices, forced a change of course. With inflation still running above the central bank’s 2-4% target, the board chose to keep tightening.
What it means for your money
A rate hike moves money in two directions at once. Borrowers feel it first, as credit card, personal loan and mortgage costs tend to rise when banks pass on the higher benchmark. Savers, by contrast, can usually find better yields, which is why banks are marketing higher rates on time deposits and savings.
| What it does to | Direction | Why |
|---|---|---|
| Credit cards, personal loans, mortgages | Costlier | Banks pass on the higher benchmark rate |
| Savings and time deposits | More rewarding | Banks compete harder for deposits |
| New government-backed loans | Pricier | Higher base feeds into new lending rates |
Even government-backed borrowing feels the pinch. Programs like the SSS emergency loan now carrying a 7% rate are a reminder that the cost of money is climbing across the board.
The balancing act
Governor Eli Remolona Jr. has signaled a less aggressive path for what comes next, weighing above-target inflation against a slowing economy. Thursday’s outcome was predicted by 11 of 15 economists polled by the Inquirer. The open question is how much further the BSP can tighten before growth starts paying the price.
