BSP Might Raise Interest Rates by April — Oil Crisis Could Force a U-Turn on Easing
The Bangko Sentral ng Pilipinas (BSP) is now seriously considering a rate hike as early as April, completely reversing its recent easing stance — all because the Middle East oil crisis won't stop hammering the Philippine economy.
Finance Secretary Frederick Go, who sits on the Monetary Board, dropped the bombshell on Tuesday: "If oil prices remain elevated and the situation persists for some time, the Monetary Board will most likely have to consider tightening." This comes just weeks after the BSP cut rates by 25 basis points in February to help boost economic growth amid the flood control scandal fallout.
The BSP itself issued a statement saying it's "closely monitoring the impact of the Middle East conflict on Philippine inflation and the economy" ahead of its April 23 monetary policy meeting. Oil prices have gone crazy, with some gas stations na nagbebenta ng diesel at over ₱100 per liter. The peso also hit record lows three times last week, touching ₱59.87 before the latest crash past ₱60.
RCBC Chief Economist Michael Ricafort echoed the sentiment, saying a rate hike in April is increasingly likely if oil prices keep climbing. The BSP also reiterated it only intervenes in the foreign exchange market to "smooth excess volatility" — not to defend any specific peso level. Translation: don't expect them to burn dollars to save the peso.
Meanwhile, Go revealed the government is moving to secure up to 2 million barrels of fuel as a buffer stock, hoping bulk purchases will bring economies of scale and lower costs. For everyday Filipinos, a rate hike would mean more expensive loans and mortgages — piling on top of already rising fuel and food prices. The April 23 meeting will be one to watch closely.
Source: Daily Tribune
