BSP looks at 4th rate hike as inflation soars to nine-year high

The Bangko Sentral ng Pilipinas (BSP) is taking into consideration the need for a fourth policy rate hike this year, as inflation settled at 6.4 percent in August—the fastest in over nine years.

“Under the circumstances, we will weigh the need for further monetary policy action,” BSP Governor Nestor Espenilla, Jr. told reporters via WhatsApp.

The Philippine Statistics Authority (PSA) earlier on Wednesday reported that inflation settled at 6.4 percent last month, the fastest since it came in at 6.6 percent in March 2009.

In the year-to-date, inflation was 4.8 percent, exceeding the government’s full-year target range of 2 to 4 percent and the central bank’s full-year forecast of 4.9 percent.

“Appropriate recommendations will be presented to the MB at its next policy meeting on September 27. It is most critical at this point to restore inflation back to the target range soonest and securely anchor inflationary expectations,” Espenilla said.

The BSP has raised policy rates thrice so far this year—25 basis points each in May and June, and 50 basis points last month.

Espenilla said there may be revisions in the forecast given the latest inflation figures, but the target will most likely remain at the 2- to 4-percent range.

“That’s part of the regular policy review ... But the inflation target remains at 2 to 4 percent,” he said.

He called for the implementation of non-monetary measures such as the proposed rice tariffication law to fully address inflation.

“An unfortunate confluence of cost-push factors continue to drive consumer price inflation in August, beyond the acceptable target range. Much of it has to do with food supply shocks. Rice in particular. These warrant more decisive non-monetary measures to fully address,” he said.

Pending before Congress, the Agricultural Tariffication Act seeks to lift the quantitative restriction (QR) on rice and allow private distributors to import from countries of their choice. —VDS, GMA News