The Central Bank of the Philippines hints at a slight rate hike to curb inflation

Source: Global Market Broadcast

Philippine Central Bank Governor Eli Remolona stated that in order to curb inflation triggered by the global oil shock, the Philippine Central Bank may moderately raise its benchmark interest rate. He said: "We will take all necessary measures to control inflation, and at this point, it seems this means a series of small rate hikes."

"We are taking proactive steps. We are working to stay ahead," he said on the day after the Philippine Central Bank's first rate hike in more than two years.

Remolona stated that the vote on the magnitude of this rate hike was very close, and policymakers also considered a 0.5 percentage point hike, but ultimately decided on a smaller 0.25 percentage point increase. He reiterated that the Philippine Central Bank will continue to closely monitor relevant data and evaluate inflation expectations to determine its next policy actions.

Although the Philippine Central Bank has initiated a tightening policy, it remains optimistic that this year's economic growth rate may accelerate to around 4.6%, and could even reach as high as 6% next year. Remolona said: "Our potential growth rate is far higher than expected."

The governor added that despite previous concerns that Middle East conflicts might hinder remittance inflows, remittances have shown "surprising resilience."