Philippine cbank has room to further raise rates – BusinessWorld newspaper

MANILA : The Philippine central bank has room to hike interest rates further to combat inflation now seen returning back to its 2 per cent-4 per cent target in the first quarter of next year, later than initially expected, a local newspaper reported on Friday.

“If inflation continues to be an issue, then we could raise policy rate from 6.25 per cent to a higher policy rate,” Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona was quoted as saying by a BusinessWorld report.

Annual inflation unexpectedly quickened for the first time in seven months in August to 5.3 per cent, bringing the year-to-date average to 6.6 per cent, well outside the central bank’s 2 per cent-4 per cent comfort range.

The BSP, which next meets on Sept. 21 to review policy, has kept its policy steady at its last three meetings, after a series of hikes totaling 425 basis points since last year to cool red-hot inflation.

The central bank had earlier forecast inflation would settle back within its target in the last quarter.

“We’re not sure about the fourth quarter because if there are further supply shocks, then the numbers will be different,” BusinessWorld reported Remolona as saying according to a Sept. 4 interview.

The newspaper reported the central bank would likely raise its 2023 average inflation forecast from the current 5.6 per cent projection at its policy meeting this month.