Weakening peso
The Philippines' economy is facing a severe supply-side shock due to the Hormuz crisis, with inflation projected to be between 5.6-6.4% in April 2026. The Bangko Sentral ng Pilipinas (BSP) raised its key interest rate to 4.5% to combat inflation and peso depreciation driven by oil prices exceeding $100 per barrel.
The Philippines is navigating a severe supply-side shock due to the Hormuz crisis. The Bangko Sentral ng Pilipinas (BSP) raised its key interest rate to 4.5% on April 23, 2026, to combat inflation and peso depreciation driven by oil prices. The BSP projects April 2026 inflation to be between 5.6-6.4%, above the target range. Some economists argue that a rate hike won't solve a supply-driven shock. The BSP is attempting to stop the peso from collapsing without using up international reserves. A prolonged blockade of the Strait of Hormuz could lead to a 'stagflationary' environment with higher inflation and weaker growth.
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