Philippines: No more rate hikes possible in 2018

• Oct 17, 2018

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) may take a breather after raising interest rates by a total of 150 basis points in four consecutive rate-setting meetings since May to anchor rising inflationary expectations.

“If there are signs that inflation is already abating as measured by the month-on-month, we may take a pause. But that is too early to tell at this point.

BSP Monetary Board member Felipe Medalla said in a press conference after the 174th meeting of the Development Budget Coordination Committee (DBCC).

The next rate-setting meeting of the Monetary Board is scheduled on Nov. 15.

Inflation climbed to a near-decade high of 6.7 percent in September from 6.4 percent in August due to higher oil prices, more expensive prices of price and agricultural commodities due to super typhoon Ompong, weak peso, and the impact of the implementation of the tax reform law.

While month-on-month inflation has been abating to 0.2 percent from August to September compared to 0.9 percent from July to August, Medalla said year-on-year inflation would likely peak in October.

The BSP earlier said inflation likely peaked in the third quarter of the year.

The DBCC has adjusted the inflation forecasts to a range of 4.8 percent to 5.2 percent this year and three percent to four percent for next year versus the previous forecast of two to four percent.

Medalla said inflation would be below the target next year if the rice tarriffication bill as proposed by the Senate is passed into law, reducing inflation by as much as 0.7 percentage point.

“Without rice tarriffication the average inflation year-on-year will be higher than four percent in all likelihood. But with rice tarriffication, it will be below four percent,” Medalla said.

Source: https://www.philstar.com/business/2018/10/17/1860595/no-more-rate-hikes-possible-2018#5x4JmMeqJikbclo4.99