The Bangko Sentral ng Pilipinas ( BSP ), the country’s central bank, has maintained its benchmark policy rate at 4.25% after a surprise off-cycle meeting on Thursday amid escalating tensions in the Middle East following the US and Israeli attack on Iran nearly a month ago that has caused oil, gas and fertilizer prices to surge around the world.

The off-cycle meeting, explains BSP governor Eli Remolona, was called so that the monetary board could more closely monitor the “unusual“ and uncertain economic environment.

“Monetary policy will focus on addressing likely second-round effects of the oil price shocks,” Remolona adds, “[and] for that we will remain vigilant.”

The BSP had not been scheduled to meet to discuss monetary policy until April 23.

The ongoing conflict in the Middle East, the BSP notes, has pushed global oil and fertilizer prices sharply higher, and oil supply disruptions have also already fed higher domestic fuel prices and transport fares.

The Philippines, which is almost exclusively reliant on imported fuel, has started to feel the effects of the war in the Middle East, with fuel costs surging by up to 177%.

President Ferdinand Marcos Jr has declared a state of national energy emergency, with the country having only about 45 days of fuel supply.

Marcos, however, assured the public that his government is already procuring some one million barrels of oil to augment the Philippines’ buffer stock.

Moving forward, the BSP, Remolona stresses, will continue to be guided “by data, and we will act as needed to pursue our primary mandate.”

Inflation in 2026, according to data from the latest BSP projections, will likely breach the 4.0% ceiling, but it is expected to move back towards the tolerance range by 2027. Inflation expectations, however, remain well-anchored.

Raising the policy rate at this time, the BSP believes, would delay recovery; but, it says, it will continue to assess how these developments will impact inflation and growth dynamics.