BSP on guard as Israel-Hamas war escalates

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is closely watching the impact of the ongoing war between Israel and Hamas on global economic growth, oil prices and the movement of the peso.

“So, so far, so good.  We’re watching developments. It’s a global phenomenon, by the way, so it’s not specific to us,” BSP Governor Eli Remolona Jr. said.

The BSP chief pointed out that the ongoing war between Israel and the Palestinian militant group has not affected global oil prices as well as the movement of the peso.

“I think so far, it hasn’t really affected oil prices… but it may have spillover effects on global growth,” he warned.

According to Remolona, there has been little movement in fuel pump prices in the country, and the peso remains stable.

“In the past, something like this would have caused oil prices to spike, but so far it has not. The peso hasn’t really depreciated so far because of this,” he added.

This week witnessed a significant oil price rollback, while the peso has remained stable at an exchange rate of 56 to $1 over the past few weeks.

Oil and food prices soared when Russia started invading Ukraine in February last year.

Inflation averaged 6.6 percent from January to September this year, well above the BSP’s two to four percent target range. After easing for six straight months to 4.7 percent in July from a peak of 8.7 percent last January, inflation has accelerated for two consecutive months to 5.3 percent in August and further to 6.1 percent in September.

Remolona has already signaled a possible 25-basis point hike in the next rate-setting meeting of the Monetary Board scheduled on Nov. 16, which he said could not be the last, as it resumes its tightening cycle after a hawkish pause since May this year.

The BSP emerged as the most aggressive central bank in the region after it hiked interest rates by 425 basis points between May last year and March this year to tame inflation and stabilize the peso that slumped to an all-time low of 59 to $1 in October last year due to the aggressive rate hikes delivered by the US Federal Reserve.