BSP’s Remolona: Off-cycle rate hike possible as early as Thursday

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said on Tuesday that monetary authorities are considering an off-cycle hike in interest rates within the week.

“It’s on the table. An off-cycle [rate hike] is on the table,” Remolona told reporters in a chance interview.

“Right now I’m going to a meeting where we’ll look at the data… If the data says inflation will go up very significantly and there’s a risk of affecting inflationary expectations, then we may go for an off-cycle hike as early as Thursday… or maybe next week,” the BSP chief said.

The BSP’s policy-setting Monetary Board is scheduled to meet on November 17, 2023, to decide on key policy rates.

Remolona had earlier said that a 25 basis point hike is possible next month.

In its September meeting, monetary authorities kept rates unchanged at 6.25% for the target reverse repurchase (RRP), the overnight deposit facility rate at 5.75%, and the overnight lending facility rate at 6.75%.

These rates have been in place since March 2023.

The possibility of snapping the policy tightening pause emerged as inflation expectations for the year have been hiked to 5.8% from the previous forecast of 5.3% and to 3.5% from 3.3% for 2024.

The two straight months of inflation rate acceleration seen in August and September also added to pressures to again tighten monetary policy.

Inflation, which measures the rate of increase in prices of consumer goods and services, grew faster at 6.1% in September from 5.3% in August as food and transport costs weighed on prices amid domestic and external supply challenges.

Monetary policy, or interest rates, is among the tools used by central banks to stabilize inflation by controlling the money supply by raising borrowing costs.

Since May last year, the Monetary Board has raised interest rates by a total of 425 basis points to temper rising inflation. —VBL, GMA Integrated News