Philippines faces difficult mix of high inflation, sluggish growth — BSP

Fresh vegetables are displayed at a market in Quezon City on March 4, 2026.

Michael Varcas / The Philippine STAR

MANILA, Philippines — The Bangko Sentral ng Pilipinas is focusing on the “second-round effects” of global supply shocks and the risk of eroding public trust as the country faces “a difficult combination” of rising inflation and sluggish growth.

The BSP said on Wednesday, November 12, that it is also considering weak aggregate demand as it works to bring inflation down. It added that restoring price stability and purchasing power is crucial to rebuilding public confidence in the central bank and the economy.

"Signs of improvement would include easing inflation, more stable inflation expectations, stronger business and consumer confidence, and a recovery in investment and employment," the central bank said.

Intending to bring inflation back to its 3% target by 2028, the BSP has raised its benchmark interest rate by 125 basis points in 2026 alone, with a "jumbo" 50-basis-point hike implemented in October.

Inflation for the same month was recorded at a three-year high of 7.8%, driven by high energy and transport costs. Economic growth, meanwhile, weakened to 2.1% in the third quarter of 2026.

The BSP will convene for its final Monetary Board meeting on December 17 and release its last monetary policy report on December 23.