ContextMessage by Eli M Remolona, Jr, Governor of Bangko Sentral ng Pilipinas (BSP, the central bank of the Philippines), for the 58th Annual Financial Executives Institute of the Philippines (FINEX) Conference, Manila, 9 October 2026.
Why it mattersThe Philippine central bank has raised rates three times this year as oil and food costs lift inflation and keep expectations above target.
- Oil and food prices are pushing Philippine inflation up.
- The peso weakened as the dollar strengthened.
- Inflation expectations sit above the 3% target.
- Raise the policy rate, by 75 basis points so far this year.
- Weigh both inflation and growth scenarios.
- Watch expectations closely to keep them anchored.
Read the speech summary
1. Why price stability
Speaking informally to a Philippine finance executives' conference, Bangko Sentral Governor Eli Remolona said the central bank's main job is stable prices, which research shows supports lasting growth and which the poorest households rank as their top concern.
2. Two inflation shocks
He compared the 2022 Ukraine shock with the March 2026 Hormuz closure: each first lifted fuel and transport costs, then food, because fertiliser depends on oil, and later core prices. In March, unusually, the dollar strengthened as oil rose, so the peso fell at the same time, a double blow for inflation.
3. How the central bank responds
Policy now works through the overnight rate and guidance on its future path, rather than money-supply targets as before the 1990s. The bank has raised its rate three times this year, by 75 basis points in total, while studying scenarios such as a severe El Niño. Surveys show expected inflation easing from 5.3% in a year to 3.3% in three years, approaching the 3% target, but he would worry if expectations stopped converging. He explained that rate decisions draw on a large model of the economy and on surveys of analysts, households and firms, noted that the 3% target suits a fast-growing economy unlike the 2% used in rich countries, and ended by stressing that independence lets the bank take unpopular decisions rather than please a crowd wanting low rates, a strong peso and low inflation all at once.
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