Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla on Tuesday hinted at a possible additional 0.25 to 0.5 percentage point (ppt) policy rate hike during the Monetary Board (MB) meeting in August.
This would bring the BSP’s overnight borrowing rate to 3.5 percent to 3.75 percent from 3.25 percent currently, following the surprise off-cycle increase of 0.75 ppt on July 14.
Speaking as a panelist at the government-organized Post-Sona (State of the Nation Address) Economic Briefing held at the Philippine International Convention Center, Medalla said there were four possible actions on Aug. 18.
The MB chair said there were four possibilities regarding the BSP policy rate—no change or an increase of 0.25, 0.5 or 0.75 ppt.
“You can rule out the lowest (zero or no change) and the highest (0.75 ppt),” Medalla said, referring to the MB’s possible move in August.
“But that is just my guess on how the seven-member Monetary Board would vote in the next meeting,” he added.
Medalla also said there would be no more off-cycle rate hikes after this month’s.
“As to how many more rate hikes for the rest of the year, that would be very data-dependent,” he said. “It all depends on what happens outside the Philippines [where] inflationary forces are just too high.”
Medalla noted that inflation in the Philippines, at 6.1 percent in June, was largely being driven by rising prices of imported goods and inputs.
The BSP is striving to find a balance between the drop in crude oil prices, which Medalla said signals that there was no more need for rate hikes, and the US Federal Reserve’s expected rate hike this week. INQ