On August 27, Bangko Sentral ng Pilipinas (BSP) raised rates for the third consecutive meeting amid inflation risks, with elevated energy prices as a key source of pressure. The central bank increased its benchmark overnight reserve repurchase rate from 4.75% to 5.0% while raising its benchmark lending rate from 5.25% to 5.50%. The following day, the Philippine peso weakened to a record low beyond 62 pesos per U.S. dollar, suggesting that further intervention may be needed. Meanwhile, the ASEAN+3 Macroeconomic Research Office (AMRO) lowered its GDP growth forecast for the Philippines from 4.1% to 3.4% in late August.
Despite currency and inflation pressures, BSP data released in August showed that total resources in the Philippine financial system, excluding BSP assets, reached a record 38.3 trillion Philippine pesos, an increase of 8% year-on-year. Banks accounted for most of this expansion, while digital bank resources jumped 46% year-on-year. Separately, BSP encouraged banks in mid-August to reduce or eliminate electronic transfer fees as part of its broader financial inclusion agenda.
