After the headline inflation rate last month, which reached a three-year high of 6.4 per cent, Governor Felipe Medala on Friday hinted that Bangko Central Bank NG Pilipinas (BSP) may raise interest rates aggressively again.
He declared during a forum organized by the Federation of Philippine-Chinese Chambers of Commerce and Industry that the latest inflation reading “increases the probability” of the central bank raising the interest rate by 50 basis points “instead of 25 basis points”. [bps]. “
However, Medala said that if external development suddenly improves, he cannot rule out the possibility of a much smaller rate increase of 25 basis points.
“For example, if tomorrow the news says that OPEC oil prices have risen to $80 [per barrel]Of course, this is wishful thinking. He. She [rate hike] Goes around 25 instead of 50 [bps],” It is to explain.
OPEC is the Organization of Petroleum Exporting Countries.
The Philippine monetary authorities see the average price of crude oil at around $106.30 per barrel this year, $95.30 per barrel in 2023 and $84.10 per barrel in 2024. This is higher than the previous batch of forecasts, which set prices for 2022 and 2023 at The levels of $100.04 and $89.50 per barrel, respectively.
High oil prices are one of the reasons why the BSP announced a 17 basis points off-cycle rate increase last July 15 after two consecutive 25 basis point increases in May and June, along with the depreciation of the peso and other external factors.
The central bank’s overnight borrowing, deposit and lending rate is currently 3.25 percent, 2.75 percent and 3.75 percent, respectively.
Medala expressed confidence in the economy’s ability to support the tight monetary policy imposed by Bangko Central to reduce inflation.
Its monetary policy-making board expects it to average 5 percent, up from 4.6 percent previously and exceeding the target of 2 to 4 percent.