THE central bank said it will take into account in upcoming inflation forecasts the global oil prices and the potential impact of El Niño which may peak in the final quarter of 2026 until the first half of 2027.
During the Development Budget Coordination Committee (DBCC) briefing before the House Committee on Appropriations on Monday, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Zeno Ronald R. Abenoja said the central bank will update its inflation forecasts in accordance with the ‘risk factors’ that it is currently tracking.
‘There are risk factors that we are looking at. One of them is the price of crude oil in the international market. Second, the potential effect of El Niño which the peak impact will be experienced in the fourth quarter of 2026 until the first half of 2027,’ added Abenoja.
‘Those are the other risk factors that the central bank thinks can affect inflation,’ he said.
Abenoja said the inflation forecasts would have to be updated at the upcoming rate-setting meeting of the Monetary Board (MB), the highest policymaking body of the central bank, as the current inflation forecasts were updated last June 18, the MB’s previous policy meeting.
As of the June 18,2026 monetary policy meeting, BSP sees headline inflation averaging at 6.4 percent in 2026; 4.5 percent in 2027 and 3.1 percent in 2028.
The target of central bank remains at 3-percent average inflation plus or minus 1 percentage point tolerance range.
The Monetary Board’s next scheduled rate-setting meeting is on August 27,2026.
At the DBCC briefing on Monday, BSP Governor Eli M. Remolona Jr. emphasized that, consistent with its mandate, ‘We worry about inflation because it diminishes the purchasing power of Filipino families.’
‘Low inflation also supports sustainable growth,’ Remolona pointed out.
The chief of the central bank said BSP is ‘encouraged’ to report that inflation has eased somewhat over the last three months.
However, he said inflation remains well above its target of 3 percent.
The BSP governor noted that the recent above-target inflation readings were due largely to global supply shocks and their spillover effects on prices in the domestic economy.
‘As you know, oil price shocks are not just about energy, they are also about food prices because oil is also the source of much of our fertilizer,’ Remolona explained.
As such, to contain price pressures, the central bank had to tighten monetary policy twice this year.
He said these were ‘carefully calibrated moves’ to help slow down inflation, anchor inflation expectations, while recognizing the ‘temporary weakness in growth.’
‘Over the medium term, we expect inflation to ease gradually. However, risks remain tilted to the upside,’ added Remolona.
As the monetary board is set to meet next week to decide on the next policy action, Remolona, who’s also the chairman of the MB, said: ‘We look at all evidence and we are prepared to take further steps as necessary to ensure that inflation returns to target.’