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The Bangko Sentral ng Pilipinas (BSP) kept its policy rate unchanged at 4.25% during a surprise off-cycle meeting on Thursday, as it sought to calm markets amid growing concerns over the impact of the Middle East war on the economy.

In a statement, the BSP said it left the target reverse repurchase rate unchanged at 4.25%.

“To raise the policy rate at this time would delay the recovery,” the BSP said.

This marks the Monetary Board’s first off-cycle move in over two years or since October 2023, when it raised the policy rate to 6.5%. The central bank was not scheduled to review policy until April 23.

BSP Governor Eli M. Remolona, Jr. said they decided to stand pat as their growth outlook remains clouded and as emerging inflationary risks prove supply-driven, “for which monetary policy has limited effectiveness.”

Mr. Remolona noted that the latest off-cycle policy action was an assurance for the market, which has grappled with uncertainties arising from the ongoing war in the Middle East.

“I hope it reassures markets that we are assessing the situation constantly,” he said.

“Normally, with inflation going where it’s going, we would have hiked. But because it was driven by supply shocks, we felt a hike wouldn’t do very much. And at the same time, because growth was relatively weak, growth would temper any rise in inflation,” he added.

Faster inflation seen

The BSP said its inflation expectations remain well-anchored but raised its forecast for 2026 to 5.1% from 3.6% previously. If realized, the headline print would breach its 2%-4% target.

BSP Deputy Governor Zeno Ronald R. Abenoja said this is based on projections that global crude oil prices will average around $85 per barrel (/bbl) by yearend and $76/bbl next year, citing futures prices.

The central bank also considered the second-round effects of oil prices, including possible uptick in transport fares, food and fertilizer prices, electricity rates and wages, as well as higher tariff rates and a potential fuel excise tax suspension.

According to Dennis D. Lapid, officer-in-charge of the BSP’s Monetary Policy Sub-Sector, inflation may hover around 3.5% in March before pushing past the BSP’s ceiling to around 5% in April.

As of February, inflation has averaged 2.2%.

However, Mr. Remolona said core inflation, which excludes volatile prices of food and fuel, will also rise but is unlikely to accelerate beyond 4%. This, he noted, is what the central bank prefers to assess their outlook amid current economic conditions.

For 2027, the BSP sees inflation averaging 3.8%, higher than its earlier estimate of 3.2%.

The BSP last held steady in February 2025, which was followed by sixth straight 25-basis-point cuts until its Feb. 19, 2026 meeting as its inflation outlook remained subdued at the time.

Mr. Remolona noted that current data showed they can do more to support growth right now than address supply-driven spikes in consumer prices.

However, he reaffirmed that the BSP remains committed to its price stability mandate.

Mr. Remolona also said the current growth environment still calls for support from fiscal policy to help the economy recover from the fallout from the corruption scandal, especially with the expected burden of energy shocks on domestic growth.

“Fiscal policy would be more effective at this stage,” the BSP chief said. “But it is, I think, unusual that inflation is now driven almost entirely by supply shocks for which monetary policy cannot do very much, but it can still do something about growth.”

The central bank trimmed its gross domestic product (GDP) growth estimate to 4.4% from 4.6% for this year but maintained its forecast for 2027 at 5.9%.

Mr. Abenoja said recovery may come by the second half of 2026 as spillovers from last year’s graft scandal and recent energy shocks could keep the growth momentum weak in the first half.

Tighter monetary policy

Looking ahead, Mr. Remolona said monetary policy decisions will focus on tempering potential second-round effects of the oil price shocks.

He noted that oil hitting $200 per barrel is an “extreme scenario but possible,” adding that the BSP would be forced to tighten if that materializes.

“It’s possible, of course,” he said. “But if that happens, we would be forced to raise our rates in a kind of catch-up mode. But for now, our scenario is not quite that extreme. So, we think we can still manage (to maintain) our policy.”

Mr. Remolona said the BSP is willing to tighten monetary policy if it can address demand-driven inflation stemming from the second-round effects of oil shocks.

“(O)nce we see second-round effects from those shocks, for which we can do something about the demand for those second-round effects, then I think it would be appropriate for monetary policy to tighten, address the inflation from those second-round effects,” he said.

Mr. Remolona also left the door open to holding more off-cycle policy meetings “as needed” if the economic crisis amid the United States-Israel war on Iran lasts longer.

The Monetary Board has five more regular policy meetings this year scheduled for April 23, June 18, Aug. 27, Oct. 22 and Dec. 17.

Meanwhile, Mr. Remolona said they are also planning to grant regulatory relief measures for the local banking sector, particularly lenders from the informal sector and low-income businesses.

“Actually, we’re contemplating the same things we did with bank lending to the informal sector and to low-income small businesses. We’re going to have a standardized restructuring if a loan is default,” he said. “We’re going to postpone some payments depending on the sector. So, very similar to what we did during (the COVID-19 pandemic),” the BSP chief said.

Long pause ahead

On the other hand, several analysts have already noted a likely pause prior to the BSP’s off-cycle announcement.

Singapore-based DBS Bank said early on Thursday that soaring pump prices and a weakening peso amid the Middle East war may prompt the central bank to hold steady for a long period.

In an e-mailed note, DBS Senior Economist Radhika Rao said they now see the BSP opting for a prolonged pause rather than delivering a final cut as initially expected.

“Onshore financial markets have already been under pressure this month, with the peso (depreciated to a record low) and equity markets amongst the regional underperformers on (a) month-to-date basis,” she said. “The BSP will be wary of lowering rates further in this environment, preferring to stay on an extended pause.”

Meanwhile, New Zealand-based ANZ Research noted that lingering growth woes and rising inflation risks complicate the BSP’s policy path.

Even as domestic activity remains sluggish, the BSP’s easing cycle has reached its end amid inflationary risks from rising costs of rice, electricity and fuel, the think tank said.

ANZ foreign exchange analyst Kausani Basak said markets are anticipating a rate hike from the central bank as the war drags on.

Ms. Basak said economic recovery will now depend on catch-up government spending, but the lack of a fixed timeline diminishes its capability as a growth driver.

“Domestic activity weakness has become more pronounced in recent months,” she said. “Its recovery will depend on a pickup in public capex (capital expenditure), with the revival timeline still unclear.”

The flood control corruption scandal last year dampened government spending, household consumption and investments, dragging GDP growth to a post-pandemic low of 4.4%.

Government spending has declined year on year for six straight months. In January, it was down by 23.9% to PHP 303.5 billion from PHP 398.8 billion a year ago.

Meanwhile, infrastructure spending has also fallen for five consecutive months, declining by an annual 45.2% to PHP 48 billion in November. — Katherine K. Chan, Reporter

President Ferdinand R. Marcos, Jr. said the Philippines has secured enough fuel supply to last beyond 45 days despite disruptions caused by war in the Middle East, as the government scrambles to line up alternative sources and ensure existing contracts are fulfilled.

Speaking on Wednesday, Mr. Marcos said authorities moved quickly to make sure deliveries under previously signed contracts continued to reach the country, even as uncertainty initially froze communications with oil suppliers.

“In the beginning, our suppliers could not even tell us what was happening, and they couldn’t give us prices,” he told a livestreamed briefing in Filipino from the presidential palace. “But through constant engagement and by putting new systems in place, supply has continued to come in.”

Global oil markets have been jolted by escalating tensions in the Middle East, a key supply region, raising concerns over shortages and higher prices for fuel-importing countries such as the Philippines. The country relies almost entirely on imported petroleum products.

Mr. Marcos said the government is not relying solely on traditional suppliers in the region. Officials have been reaching out to alternative sources unaffected by the conflict, though he cautioned that it is still too early to say whether new contracts have been finalized.

“It would be premature to say that everything has been perfected. But things are beginning to open up,” he said. “I’m very confident in saying that we have sufficient supply.”

The Department of Energy (DoE) on Tuesday said the Philippines has an average fuel inventory equivalent to about 45 days of supply, though levels vary by product.

Mr. Marcos expressed confidence that additional shipments would arrive before stocks run low, ensuring a steady flow rather than isolated deliveries.

“We can be fairly confident that after the 45 days, we will already have oil arriving here in the Philippines,” he said. “Not just one delivery, not just two deliveries, but a flow of petroleum and petroleum-related products.”

Mr. Marcos credited the country’s diplomatic ties for helping secure continued access to fuel, noting that good relations with partner countries have played a key role in keeping supply lines open.

Authorities, he said, would continue to explore new sourcing arrangements while monitoring global developments, as energy prices remain vulnerable to further geopolitical shocks.

He and Energy Secretary Sharon S. Garin earlier said the country is talking to China, Russia, the US, South American countries, Brunei, South Korea, Japan and India, among others, for oil supply, noting the discussions yield positive results.

As a net oil importer, the Philippines is particularly vulnerable to disruptions in global oil supply and volatility in prices. It imports nearly all of its crude oil from the Middle East, with Saudi Arabia as its top supplier.

At the same time, the Department of Budget and Management (DBM) has approved the release of PHP 20 billion to the DoE to secure fuel supply for the country.

The funds were released on March 24 through a Special Allotment Release Order (SARO) and Notice of Cash Allocation (NCA), which was sourced from the Malampaya Gas Fund under the Special Account in the General Fund (SAGF), the DBM said in a statement.

The P20 billion will fund the “strategic procurement of fuel products — including diesel, gasoline, and liquefied petroleum gas (LPG) — to boost national fuel inventory, stabilize pump prices, and ensure uninterrupted operations across transport, logistics, agriculture, emergency response, and other critical sectors.”

It will be implemented by the Philippine National Oil Company-Exploration Corporation, which has already started procurement.

‘Do not panic’

On Tuesday evening, Mr. Marcos placed the country under a national state of energy emergency under Executive Order (EO) No. 110, noting the ongoing war’s imminent threat to the country’s energy supply. The order will be in effect for a year.

The President on Wednesday clarified that the declaration was only a “precautionary tool” and that only the energy sector was covered by the state of emergency.

“I want to assure everyone that this does not mean that we should panic. It means that we are doing everything that we can to assess and to alleviate the situation,” Mr. Marcos said.

Under the EO, the President created the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) committee for a coordinated response in stabilizing fuel supply, sustaining economic activity and protecting sectors most exposed to rising energy costs.

The EO also allows authorities to focus interventions on ensuring adequate energy supply and mitigating price spikes while mobilizing government resources more efficiently.

“The source of the problem is the supply and the price of energy, and that is what we need to address directly… The reason that I declared an energy emergency is to provide government with more options should the need arise,” Mr. Marcos said.

Transport workers are planning a two-day strike starting Thursday to protest surging oil prices and demand a fare hike, a move Mr. Marcos rejected last week.

They also want him to cut or halt excise taxes on petroleum products to lessen oil prices.

Mr. Marcos on Wednesday signed into law Republic Act No. 12316, a measure granting him the power to temporarily suspend or reduce excise taxes on petroleum products to mitigate the impact of rising global oil prices.

Asked if the government will take control of the oil industry, the President said he hopes the situation won’t call for the move.

“We don’t want to get into that discussion,” Mr. Marcos told reporters and refused to take follow-up questions.

Jay M. Layug, a former energy undersecretary and executive board member of the Philippine Energy Research and Policy Institute, echoed the President’s remarks.

“No need to take control of oil companies,” he said in a Viber message.

“What government needs to do is implement multiple measures to manage demand for petroleum and conserve energy use. Example, coding system expansion, carpooling, expanded WFH (work-from-home) program, expanded EV (electric vehicle) program, etc.”

The government had already mandated a four-day workweek for government offices to lessen energy use.

Fuel prices climbed again this week, extending one of the longest runs of increases in recent years.

Noel M. Baga, co-convenor of the Center for Energy Research and Policy think tank, said the declaration is overdue, noting that the legal tools were already in place and that recent price hikes and suspended public utility operations highlighted the urgency of stronger action.

“Every power generation project in the pipeline must be fast-tracked,” Mr. Baga said. “The emergency declaration signals that the government is finally treating this as the crisis it is. The next measure of seriousness is whether price ceilings follow.”

Infra spending

Meanwhile, the DBM said it has also released PHP 16.5 billion to the Department of Public Works and Highways (DPWH) in a bid to accelerate infrastructure spending and support economic growth.

The funds will be released via the issuance of an NCA to the DPWH Central Office and will be used to cover the settlement of the department’s due and demandable accounts payable.

“Upon the order of the President, we are accelerating infrastructure spending to keep projects moving and the economy growing. This PHP 16.5 billion release ensures that obligations are paid on time,” Budget Secretary Rolando U. Toledo said in a statement. — Erika Mae P. Sinaking, Reporter

The Philippine government has allocated around PHP 20 billion to purchase two million barrels of diesel to boost the country’s stockpile, which is currently equivalent to 45 days of supply.

“We are reserving about PHP 20 billion. It’s very expensive. But what eventually will happen is we sell also the buffer (to fuel retailers) so we can use the money to buy more,” Energy Secretary Sharon S. Garin said in a virtual press briefing on Tuesday.

The planned buffer stock is enough to cover 10 days’ worth of consumption.

Earlier, the Department of Energy (DoE) has tasked the oil and gas exploration arm of state-run Philippine National Oil Co. to procure around two million barrels of fuel to boost the country’s inventory.

So far, the government already secured about 400,000 barrels of oil from Southeast Asian countries and is now negotiating for additional 600,000 barrels outside to ensure arrival this week.

“It’s not that big, but we need to build it up just in case so that we have reserves. It’s better to have little than nothing at all,” Ms. Garin said in a mix of Filipino and English.

The Energy chief said that the country’s existing suppliers of imported supply have assured it will deliver orders even as the Middle East conflict has also affected them.

Currently, the Philippines has 45 days’ worth of fuel supply, Ms. Garin said.

“So far, our supply is still manageable,” she said.

As of March 20, the country’s inventory of gasoline could last  53.14 days, diesel for 45.82 days, and kerosene for 97.93 days.

However, the country’s jet fuel inventory is only 38.62 days, while liquefied petroleum gas or LPG is 23.51 days.

Since the Philippines has very limited domestic oil production to cover its demand, local oil firms mostly rely from imports coming from the Middle East, the world’s biggest oil-producing region that is currently disrupted by the Iran war.

The majority of the finished petroleum products come from Asian countries such as Japan, Korea, and China, but they also source crude oil from the Middle East.

Pump prices surge

Meanwhile, pump prices continue to soar this week as the Iran war is about to enter its fourth week.

Starting Tuesday, gasoline prices in Metro Manila rose by PHP 8 to PHP 12 per liter, diesel by PHP 15 to PHP 18 per liter, and kerosene by PHP 12 to PHP 22 per liter.

The latest price adjustments have pushed diesel and gasoline prices to as high as PHP 144.20 and PHP 102.50 per liter, respectively. Kerosene prices could have reached as much as PHP 165.79 per liter.

“Even though it is smaller than last week, this is still a significant jump considering that it will still affect our transportation industry, as well as all industries, as well as the buying power of our households,” Ms. Garin said.

So far, Chevron Philippines, Inc. (Caltex) and TOTAL Philippines Corp. have informed the DoE that they are set to stagger the implementation of their respective price adjustments in two to five tranches.

Ms. Garin said fewer companies are staggering price hikes because of the increasing financial burden.

Aside from local pump prices, the ongoing volatility in the global market is also threatening to push electricity rates upward by 16%, according to the simulation conducted by the DoE.

To temper the expected increase in power rates, the government is looking to increase the use of coal in power generation and calling for advanced completion of renewable energy projects.

Ms. Garin said this move could help reduce the expected spike in power rates by PHP 2.

The Philippines is also a major importer of coal, which is mostly used for power generation. The country relies heavily on Indonesia for its coal supply, sourcing approximately 98% of imported coal.

Ms. Garin said the Indonesian government assured the Philippines of “steady supply of coal.”

“We have assurance from them and we’re good partners with Indonesia. We have a long-standing trade relationship with Indonesia,” she said.

Ms. Garin said the government is also in talks with power generators to assess how much domestic coal they can maximize in their operations. — Sheldeen Joy Talavera, Reporter

Philippine President Ferdinand R. Marcos, Jr. declared a national state of energy emergency on Tuesday, which gives the government expanded powers to secure fuel supplies and shield the economy from surging oil prices triggered by the war involving Iran, Israel and the US. 

In Executive Order No. 110, Mr. Marcos said escalating hostilities in the Middle East and disruptions in critical shipping routes such as the Strait of Hormuz pose an “imminent danger” to the country’s energy security, underscoring the Philippines’ vulnerability as a major importer of petroleum products. 

The order activates a coordinated response framework known as UPLIFT or Unified Package for Livelihoods, Industry, Food and Transport, aimed at stabilizing fuel supply, sustaining economic activity and protecting sectors most exposed to rising energy costs. 

Global oil prices have surged since the conflict erupted late February, raising inflation risks for the Philippines, where fuel costs directly affect transportation fares, food prices and electricity rates. 

The move comes even as Malacaсang has maintained that the country is not facing an immediate fuel shortage, citing stable inventories and diversification of supply sources. 

The Palace said the government is negotiating with alternative suppliers including China, Russia, Japan, South Korea, Brunei and India to reduce reliance on Middle Eastern oil. Mr. Mr. Marcos earlier said talks with these countries had been “positive,” though no supply agreements have been announced. 

Under the executive order, the Department of Energy (DoE) may take emergency actions such as direct procurement of petroleum products and closer coordination with state‑owned companies, including the Philippine National Oil Co. Authorities are also empowered to tighten oversight of fuel pricing and crack down on hoarding, profiteering and market manipulation. 

The government will prioritize fuel allocation for critical sectors including public transport, healthcare, power generation and utilities. 

Approvals for energy projects will be fast‑tracked to boost domestic generation capacity, while government offices will implement stricter conservation measures, including a four‑day workweek to curb energy use. 

Short‑term relief measures include fuel subsidies for transport operators and drivers, fare support for commuters, expanded public transport services and targeted assistance for households and industries most exposed to higher fuel costs. 

The order also outlines longer‑term steps to reduce dependence on imported oil, including accelerating renewable energy development, expanding electric vehicle adoption in mass transport and promoting energy‑efficiency measures across sectors. 

A Cabinet‑level committee headed by Mr. Marcos will oversee implementation, bringing together officials from economic, transport, agriculture and social welfare agencies to coordinate supply‑side interventions and targeted relief. 

As the Iran war nears its one‑month mark, the Philippines has relied heavily on fuel and cash subsidies to cushion the impact on consumers. 

The President has asked Congress to grant him emergency powers to suspend or reduce excise taxes on petroleum products, though he has yet to sign the proposed measure and has cited complex fiscal calculations. 

Fuel prices rose again this week, extending one of the longest streaks of increases in recent years. Some oil companies raised diesel prices by as much as PHP 18 per liter and gasoline by about PHP 8, while government estimates pointed to increases of up to PHP 11.88 for diesel, PHP 6.47 for gasoline and PHP 13.66 for kerosene. 

In Metro Manila, pump prices could climb to PHP 126.78 per liter for diesel, PHP 98.07 for gasoline and PHP 157.45 for kerosene, marking the 13th straight weekly increase for diesel and kerosene and the 11th for gasoline. — Chloe Mari A. Hufana, Reporter