MANILA, May 22 (Reuters) – The Philippine central bank could hike interest rates ahead of its scheduled policy meeting on June 18, its governor said on Friday.
Bangko Sentral ng Pilipinas Governor Eli Remolona said in an interview with One News that the central bank’s interest rate hike in April “didn’t seem enough”, noting that policymakers face a big and persistent supply shock.
“It’s a toss-up whether we do an off-cycle, or we just wait for the regular meeting,” Remolona said.
The Philippine central bank hiked its key interest rate by 25 basis points to 4.50% in April to keep a lid on inflation. Spiralling fuel costs have raised concerns that pump prices could trigger hikes in other consumer goods.
The central bank also held an off-cycle meeting on March 26, becoming the first central bank in Asia to do so, reflecting heightened concerns about the impact of the Middle East conflict on inflation and economic growth.
The peso has lost about 4.6% of its value against the dollar, breaching the 60-peso level, according to LSEG data.
Indonesia on Wednesday announced a surprise 50-basis-point rate hike to shore up the rupiah, which has been trading at record lows against the dollar. The central government also seized control of commodity exports to ensure proceeds remain onshore and are held in the local currency.
India, Indonesia, and the Philippines are particularly vulnerable to the disruptions in the Middle East because they are oil importers that are also being hit by capital outflows as investors take their cash elsewhere.
“Whatever we do, we want to convey the message that we’re trying to be proactive,” Remolona said. “We’re trying to stay ahead of the curve and that we’re serious about inflation.”
(Reporting by Mikhail Flores and Karen Lema; Editing by John Mair)
