Pressure on the Bangko Sentral ng Pilipinas (BSP) to raise its benchmark interest rate has eased after economic growth slowed to a post-pandemic low in the second quarter of the year, according to the central bank officials.

Speaking to reporters on the sidelines of the central bank’s stakeholders’ appreciation event on Monday, Aug. 10, BSP Governor Eli M. Remolona Jr. said the monetary authority remains open to further tightening if necessary. The policy-setting Monetary Board will adjust borrowing costs “as much as necessary” to bring inflation back to its three percent target, Remolona said.

Headline inflation remained above the four percent target ceiling in July despite easing to a three-month low of 6.2 percent. Meanwhile, core inflation—which strips out volatile food and energy items—has also shown signs of moderation.

“Core inflation may have plateaued,” BSP Deputy Governor Zeno Ronald R. Abenoja told reporters during the event, highlighting the first deceleration in core inflation in July from a peak of 4.4 percent in June.

Abenoja, who oversees the BSP’s Monetary and Economics Sector, noted the downward momentum in price pressures. The three-month low in headline inflation coincided with a second-quarter gross domestic product (GDP) growth outturn of 2.3 percent.

According to the BSP chief, policymakers are focusing closely on core inflation rather than the headline figure, as core inflation reflects factors within the central bank's control. “In the headline, there are a lot of supply shocks,” he explained.

Further rate hikes could help anchor price movements, but they pose a headwind for growth by dampening private borrowing and consumption. This leaves the BSP balancing its primary price stability mandate with output growth.

Remolona affirmed that pressure to hike rates at the upcoming Aug. 27 policy meeting has receded following weaker-than-expected second-quarter GDP performance. Following the August session, the Monetary Board is scheduled to meet next on Oct. 22 and Dec. 17.

Abenoja added that the central bank had anticipated soft growth in the first half of the year, expecting firmer signs of recovery to take hold in the second half. The economy continues to feel the effects of dampened confidence stemming from high-profile flood control corruption scandals that unraveled in late 2025.

Despite its firm commitment to price stability, Remolona emphasized that the BSP is not ignoring economic growth.

“Growth is implied by the inflation mandate. If you can maintain price stability, that tends to sustain growth,” Remolona said. “But in the short run, sometimes there are problems with growth, and we take that into account. We don’t ignore them.”

Dutch financial institution ING projects that the BSP may maintain a hawkish stance across upcoming meetings, with rates potentially peaking at 5.25 percent this year.

“Persistent inflation pressures are likely to reinforce a hawkish policy stance, supporting our forecast for an additional 50 basis points (bps) of tightening in 2026,” Deepali Bhargava, regional head of research for ING Asia-Pacific, noted in a commentary.

“Political uncertainty remains a key downside risk, potentially delaying reforms, dampening growth, and sustaining downward pressure on the peso,” Bhargava added.