Philippine inflation surge rekindles speculation of another BSP rate hike
September inflation jumped to a three-year high, prompting analysts to warn that the Bangko Sentral ng Pilipinas may raise rates at its Oct. 22 meeting.
Inflation in the Philippines accelerated sharply in September, reaching 7.2% annually, the highest level in three years and well above the central bank’s 3% target. The surge was fueled by weather-related food shortages and rising oil prices, while core inflation hit 4.7%, a near three-year peak. Nomura Global Markets Research economists Euben Paracuelles and Nabila Amani argue that the Bangko Sentral ng Pilipinas may respond with a quarter-point rate increase at its Oct. 22 policy meeting, and could consider additional hikes if pressures persist.
They caution that a strong El Niño and any rebound in oil prices could further elevate food inflation. BSP Governor Eli Remolona Jr. has signaled readiness to act decisively, while ING Bank’s Deepali Bhargava expects a cautious tightening bias. United Overseas Bank economists project a total of 75 basis points of hikes through early 2027, though Fitch-linked BMI foresees possible rate cuts later next year as inflation eases.
Why it matters
Higher rates could slow borrowing and affect growth as the Philippines grapples with rising prices and a fragile economy.
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