The Bangko Sentral ng Pilipinas said inflation in October likely eased to as low as 5.1 percent from 6.1 percent in September on reduced prices of rice and petroleum products.
It said the October inflation might have settled within a range of 5.1 percent to 5.9 percent. The Philippine Statistics Authority will release the official figure on Nov. 7.
“Lower prices of rice, meat and vegetables along with the reduction in the prices of petroleum products could contribute to downward price pressures,” the BSP said in its latest monthly forecast.
It said that “higher prices of electricity, LPG, fruits and fish, as well as the recent adjustment in jeepney fares are the primary sources of upward price pressures in October.”
Inflation peaked at 8.7 percent in January 2023 before easing in the next six months. It accelerated again to 5.3 percent in August and 6.1 percent in September on the back of higher food and fuel prices.
The BSP raised last week the overnight borrowing rate by 25 basis points to 6.5 percent in an off-cycle move to rein in inflation.
BSP Governor Eli Remolona said he was not expecting inflation to settle within the target range of 2 percent to 4 percent this year, hinting that monetary authorities might further increase the interest rate by another 25 bps if needed.
He said any tweak in the policy settings would be data dependent, meaning the BSP’s Monetary Board would take into account the latest developments, particularly the inflation print in October and the gross domestic product to be announced prior to the Nov. 16 policy meeting.
Hongkong and Shanghai Banking Corp. earlier said the Monetary Board might maintain the current monetary policy settings in the last two meetings of the year.
“Moving forward, we think the BSP will keep its policy rate steady at 6.50 percent in the November and December Monetary Board meetings. After all, core inflation is still threading downwards, which means the BSP’s tight monetary stance is already in the works,” HSBC said in a report.
HSBC said that as the off-cycle hike was pre-emptive in nature, “we don’t think the BSP will hike interest rates in its November rate-setting meeting, even if the Fed hikes in November.”
The British bank said the BSP maintained a very hawkish tone and might continue doing so.
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