The Bangko Sentral ng Pilipinas (BSP) raised its policy rate by 25 basis points to 4.5% at its most recent Monetary Policy Committee meeting on April 23, according to OCBC strategists Sim Moh Siong and Christopher Wong [1]. The central bank indicated that further rate hikes are possible, as inflation forecasts have been revised higher and second-round effects are emerging, particularly from rising oil and fertilizer prices that are feeding into domestic fuel and food costs. Core inflation continues to edge higher, prompting the BSP to act more proactively rather than simply responding to external price shocks [1].
Governor Remolona stated, 'once we start raising the policy rate, we’re likely to raise it again,' and noted that a 50bp move was discussed during the meeting. This signals a shift in the BSP's stance towards addressing broader inflationary pressures. However, the 25bp hike was described as measured, with the Board emphasizing that it will 'still accommodate economic recovery over the medium term' [1].
For the Philippine Peso (PHP), the BSP's actions are relatively supportive as they reduce the risk of the central bank falling behind the curve. Nevertheless, the Peso remains vulnerable to imported energy shocks and uncertainties related to the US-Iran ceasefire dynamics. OCBC strategists caution that until there is clarity on the ceasefire agreement, the PHP may continue to face pressure [1].
Technical analysis from OCBC suggests that risks for the PHP are somewhat skewed to the upside, with resistance at 60.83 (previous all-time high) and support at 60.15 (21-day moving average) and 60 (23.6% Fibonacci retracement of the 2026 low to high) [1].
CONCLUSION
The BSP's measured rate hike and forward guidance are seen as supportive for the Philippine Peso, but ongoing inflationary pressures and external energy risks continue to weigh on the currency. Market participants are likely to remain cautious until there is greater clarity on global risk factors, particularly energy prices and geopolitical developments.