No off-cycle BSP meeting but another rate hike likely
This month’s Monetary Board policy meeting will not be moved up in response to August’s inflation surprise, the chief of the Bangko Sentral ng Pilipinas (BSP) said on Monday, but a fresh rate hike is all but likely to be announced.
“We will follow the regular cycle. The (meeting will still be on the) 27th (of September) with strong monetary action,” central bank Governor Nestor Espenilla Jr. told reporters in an interview.
BSP Governor Nestor Espenilla Jr. PHOTO BY ANDREA DE LA CRUZ
The BSP’s policymaking Monetary Board, which will hold its sixth meeting for the year on September 27, has raised key interest rates by a total of 100 basis points since May to address above-target inflation.
August’s fresh nine-year high of 6.4 percent, which exceeded the central bank and Finance department’s 5.9-percent forecasts, raised the prospect of another rate increase when monetary authorities meet next week.
Espenilla earlier this month said that an emergency Monetary Board policy meeting was a “possibility” as part of “strong immediate action”. The board normally meets every six weeks.
Analysts had echoed the need for an off-cycle meeting, with ING Bank Manila senior economist Joey Cuyegkeng most recently stressing that this would be “an indication of [the]BSP’s seriousness and aggressive response to soaring inflation, deep-in-the-red real policy rates and some political noise.”
Meanwhile, Espenilla said that it was too early to assess the toll from Typhoon Ompong, which battered the northern Philippines during the weekend, but added that the inflationary impact would likely be limited to the short term.
“It is too early to tell the damage it caused and what the impact [down the road will be]. Historically, typhoons cause disruptions in supply but the impact tends to be localized and transitory. So I don’t think it will create a problem on inflation for a longer horizon,” he said.
“[F]or the main inflation problem we’re dealing with right now, several measures have already been announced, non-monetary and monetary measures, so we continue along with those,” the central bank chief continued.
Economic managers have said that measures under a proposed executive order (EO)—up for signing by President Rodrigo Duterte—will bring inflation back to the government’s 2-4 percent target.
Measures included in the proposed EO, according to the National Economic and Development Authority (NEDA) are the removal of “administrative and non-tariff barriers” on fish, rice, sugar, meat and vegetable imports.
Immediate measures include making rice available in markets through the release of stocks from National Food Authority warehouses, importation and the distribution of projected harvests; monitoring of rice transfers from ports to warehouses and retail outlets; and the speedy passage of the rice tariffication bill.
Availability of fish and chicken will be increased by allowing imports to be distributed quickly and by setting up public markets with cold storage facilities where producers can sell directly to end consumers, the NEDA also said.
The measures include the review and possible amendment of the Fisheries Code and other policies governing the sector, and legislation for the tariffication of sugar, fish, meat and vegetables.
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