AN off-cycle rate hike could be announced this Thursday to rein in inflation, Bangko Sentral ng Pilipinas (BSP) Gov. Eli Remolona Jr. said on Tuesday.
“The data says inflation will go up very significantly, and there is a risk of affecting inflationary expectations,” the central bank chief said at the sidelines of the 2nd Digital Financial Inclusion Awards at the BSP.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. Photo from BSP
“We will have a meeting, and we will look at the data… [and] it (an off-cycle rate hike) is on the table as early as Thursday,” he added.
The last time the BSP implemented an off-cycle or unscheduled rate hike was in July 2022, when it raised the policy rate by 75 basis points to 3.25 percent to control surging inflation.
That increase was announced five weeks ahead of a scheduled meeting and was also higher than expected.
The BSP’s policymaking Monetary Board, which has paused for the last four meetings following 425 basis points of rate hikes starting in May last year, is supposed to next tackle interest rates on November 16.
During their last meeting on September 21, monetary authorities said that inflation was on a “higher path.”
They added, however, that it was still expected to return to the 2.0- to 4.0-percent target in the fourth quarter of this year.
The rate accelerated for a second straight month to 6.1 percent in September, up from 5.3 percent in August. Inflation had fallen for the six months prior after hitting a 14-year high of 8.7 percent in January.
Higher inflation prompted the Monetary Board to revise its forecasts for 2023 and 2024 to 5.8 percent and 3.5 percent, respectively, from 5.6 percent and 3.3 percent.
The 2025 projection was kept at 3.4 percent.
“The upward adjustments in the 2023 and 2024 projections reflect the spillovers from weather disturbances, rising global crude oil prices, and the recent depreciation of the peso,” it said last month.
Remolona had flagged an off-cycle rate hike last month, following up on statements that a 25-bps rate hike could be on the table during the November 16 meeting.