‘Next rate hike may not be last’

BSP chief sees no end yet to tightening cycle

MANILA, Philippines — A possible rate hike in November may not be the last with the expected higher-for-longer interest rate environment amid more upside risks to inflation, according to Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. In an interview aired on Bloomberg Television, Remolona said monetary authorities are not convinced that the possible rate hike in the next rate-setting meeting on Nov. 16 would be the last.

“It won’t be the last hike in the cycle, we’re not convinced of that… So now, we’re still in a hawkish stance,” Remolona said.

After the BSP kept key policy rates on hold for the fourth rate-setting meeting since May amid the inflation downtrend and the slower-than-expected gross domestic product (GDP) growth in the second quarter, Remolona signaled the possibility of a rate hike in November amid the upside risks to inflation.

The BSP emerged as the most aggressive central bank in the region when it raised interest rates by 425 basis points between May 2022 and March 2023 to tame inflation and stabilize the peso.

Inflation quickened to 5.3 percent in August after easing for six straight months to 4.7 percent in July from a peak of 8.7 percent in January, This brought the average to 6.6 percent from January to August, still above the central bank’s two to four percent target range.

“Well, the inflation number, the last number that came in was worse than before, but it was not enough for us to hike at this time. But at the same time, the upside risks seem more likely than usual and that to me means that there is a good chance for a hike the next time. So we will see, we’ll have to watch the numbers,” Remolona said.

Had inflation last month been