The Bangko Sentral ng Pilipinas (BSP, the Philippines' central bank) raised its benchmark interest rate by 25 basis points, or one-hundredth of a percentage point, to 5% at its August 2026 policy meeting, matching market expectations and marking a third consecutive increase. Headline inflation eased to 6.2% in July from 6.4% in June, while core inflation slowed to 4.2% from 4.4%. The BSP continues to monitor upside risks from volatile oil prices, severe El Niño-related agricultural costs and potential wage adjustments. Average headline inflation is expected to exceed the 4.0% tolerance ceiling in both 2026 and 2027 before moving toward the 3.0% target by 2028. Growth fundamentals remain intact despite weak first-half performance, with fiscal support expected to strengthen activity in the second half. The overnight deposit and lending facility rates also increased to 4.5% and 5.5%, respectively.