BSP considering off-cycle rate hike as inflation risks worsen - BusinessWorld Online

BANGKO SENTRAL NG PILIPINAS Governor Eli M.Remolona, Jr..— REUTERS/ELIZABETH FRANTZ By Katherine K.

Chan, Reporter THE BANGKO SENTRAL ng Pilipinas (BSP) has opened its door to a more aggressive monetary policy path to curb inflation as persistent shocks stemming from the Middle East conflict continue to feed into consumer prices.In an exclusive interview on One News’ Money Talks with Cathy Yang on Thursday, BSP Governor Eli M.

Remolona, Jr.said the Monetary Board is considering a second straight rate hike before its June 18 meeting.

Asked about the likelihood of off-cycle tightening, Mr.Remolona said: “I wouldn’t say likely.

We’re considering it.” However, the central bank chief noted that they may also wait until the May inflation report comes out on June 5 before delivering the next monetary policy decision. “That’s very close to the next scheduled policy meeting.So, at this point, it’s a toss-up whether we do an off-cycle or we just wait for the regular meeting, which is not that far away anyway,” Mr.

Remolona said.Mr.

Remolona also acknowledged the emerging stagflation risks, with slowing economic growth and accelerating inflation, but said the BSP is banking on fiscal policy to help the economy recover as it seeks to maximize its monetary policy tools for inflation-targeting.The BSP reversed its policy path at its April 23 meeting, starting a new tightening cycle as it delivered its first 25-basis-point increase in over two years to bring the key policy rate to 4.5%.

Central bank officials have said that their latest move was aimed at preventing broader second-round effects of inflation, keeping inflation expectations anchored and steering it back to their target as the prolonged Middle East war dimmed the growth outlook.  However, despite the preemptive rate hike last month, inflation has accelerated faster than expected, raising the risk that the BSP could fall behind the curve, accor...