Likely Nov rate hike won’t be last, says BSP

MANILA  -A possible monetary policy rate hike for the Bangko Sentral ng Pilipinas (BSP) this coming November won’t be the last, according to BSP Governor Eli Remolona Jr.

Remolona said in an interview with BloombergTV on Friday that while rising inflation seen in August was not enough for the Monetary Board (MB) to raise the BSP’s benchmark rate in their meeting on Sept. 21, “there’s a good chance for a hike the next time” that the MB meets, which is in November.

Headline inflation rose to 5.3 percent in August after six previous months of continued easing, from 8.7 percent in January to 4.7 percent in July.

READ: BSP chief ‘honestly’ eyeing November rate hike

The uptick last August “wasn’t enough for us to hike this time (September), but at the same time, the upside risks seem more likely than usual,” Remolona said.

In particular, policymakers are wary about looming increases in transport fares and in electricity rates.

Remolona said these were both “very likely” considering that petitions for fare hikes are already pending while prices of fuel, and thus of electricity, are in their seasonal climb.

READ: 3 transport groups seek P5 fare increase

The MB chair and BSP chief said these two factors could add about 0.5 percentage point to the forecast of inflation for 2024.

In their meeting on Thursday, the MB raised their forecast for full-year average inflation in 2023 to 5.8 percent from the previous forecast of 5.6 percent, and in 2024 to 3.5 percent from 3.3 percent.

READ:  Philippine inflation rose to 5.3% in August

Remolona said that the inflation numbers had been just a bit worse such that the policy decision had been “pretty close between hiking and not hiking.”

He said that, even then, the eventual decision was a unanimous vote for a continued pause at 6.25 percent.