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  • Writer's pictureBy The Financial District

BSP Resuming Tight Credit Policy

Monetary authorities are ready to resume policy tightening as they expect inflation to remain elevated in the coming months following the rise in prices for the second straight month in September, according to the Bangko Sentral ng Pilipinas (BSP).


Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. had signaled the possibility of a rate hike in November after the central bank’s Monetary Board maintained a hawkish pause in four consecutive rate-setting meetings in May, June, August, and September. I Photo: Eli M. Remolona Jr. X



The central bank noted that the upside risks to inflation remained significantly skewed until 2025, as inflation accelerated to 6.1% in September, at the upper end of the BSP’s 5.3% to 6.1% forecast range from 5.3% in August.


The inflation rate last month was the highest in five months, or since the 6.6% recorded in April.



Inflation had been easing for six straight months, falling to 4.7% in July from a peak of 8.7% in January. However, it has been on the rise lately due to continued supply shocks affecting food prices and the increase in global oil prices.


Despite this upswing, the BSP believes that inflation is still projected to decelerate back to within the two-to-four percent inflation target by the end of this year, in the absence of further supply shocks.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. had signaled the possibility of a rate hike in November after the central bank’s Monetary Board maintained a hawkish pause in four consecutive rate-setting meetings in May, June, August, and September, citing the downtrend in inflation and the stability of the peso.


The next rate-setting meeting of the Monetary Board is scheduled for November 16, according to the BSP chief, who had previously indicated that the possible rate hike in key policy rates next month would not be the last, and did not rule out the possibility of an off-cycle rate hike.


Market & economy: Market economist in suit and tie reading reports and analysing charts in the office located in the financial district.

Inflation quickened for a second straight month in September due to a double-digit increase in rice prices, putting pressure on the Bangko Sentral ng Pilipinas (BSP) to resume monetary tightening.


"I think a hike in November is possible, but we're still analyzing the inflation data," BSP Governor Eli M. Remolona, Jr. told reporters.


Preliminary data from the Philippine Statistics Authority (PSA) showed headline inflation accelerated to 6.1% in September from 5.3% in August but slowed from 6.9% in September 2022.




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