(Aug 14): The Philippine central bank said it will be less aggressive in fighting inflation as economic growth slows, while President Ferdinand Marcos Jr pledged to ramp up fiscal support.

“The weaker growth that we’re seeing means we’ll be less aggressive in trying to tame inflation,” Bangko Sentral ng Pilipinas Governor Eli Remolona told an Economic Journalists Association of the Philippines forum in Manila on Friday. 

Still, policymakers will need to see “a more convincing downward trend for inflation before we can relax,” he said.

The Philippines is grappling with the weakest expansion and fastest inflation among Southeast Asia’s biggest economies, after a graft scandal sapped confidence and the Iran conflict stoked price pressures. Earlier this month, the government reported that second-quarter economic growth was the slowest since the fourth quarter of 2009, outside of the pandemic, as consumers cut spending and investment shrank. 

Marcos, in another forum on Friday, said his administration is taking steps to speed up spending, including accelerating bidding for infrastructure projects. 

There will be a catch-up in state spending by the fourth quarter, Marcos told a forum organised by the Foreign Correspondents Association of the Philippines, hoping that investor confidence will return.

“We have taken many measures to accelerate the rate of public spending, and as of the end of the second quarter of this year, we are only at the shortfall of about 7% year-on-year in terms of public spending,” Marcos said.

Remolona said the 2.3% gross domestic product growth the government reported for the second quarter was “not that bad” because it was based on the estimated expansion of 5.4% a year ago, where a large portion came from spending on flood control projects that didn’t go as intended.

As such, economic expansion in the second quarter of last year was “really just 4.6%” and that growth in the three months to June of 2026 was more like 3.2%, Remolona said, adding that that estimate is still weak given the economy’s capacity to grow by 5.5%.

“It makes a big difference in the way we decide monetary policy,” he said. 

Monetary authorities have raised interest rates by 50 basis points this year and will hold their next rate-setting meeting on Aug. 27. 

On Friday, the Philippine peso fell 0.2% against the dollar after having recovered from an all-time low of 61.850 last month.

Marcos said the the country won’t spend all its reserves to defend the peso, noting that the currency’s weakness is due to a strong dollar.

Uploaded by Evelyn Chan