MANILA— Philippine central bank governor Felipe Medalla said on Friday that in the “worst-case scenario” of inflation rising above 9%, interest rates might be hiked by 50 basis points.
Bangko Sentral ng Pilipinas’ (BSP) next rate hike could be 25 or 50 basis points depending on the latest economic data, he said.
“Worst-case scenario is (inflation) above 9%. If that’s the case, clearly we have to do something,” Medalla told reporters.
Inflation in January hit a 14-year high of 8.7%, prompting BSP to say it was likely to raise its benchmark interest rate PHCBIR=ECI one more time this year, after having hiked by 50 basis points on Feb. 16.
February’s inflation data is due out on March 7, with analysts set to closely watch the number ahead of the central bank’s next rate-setting meeting on March 23.
“Another month…of upside surprise for inflation could prod the BSP to hike more aggressively,” said Nicholas Mapa, senior economist at ING.
BSP has raised rates eight times for a total of 400 basis points since last year,
Medalla said on Friday he still expected inflation to return to within a target range by the fourth quarter of this year.
—Reporting by Enrico Dela Cruz; Writing by Kanupriya Kapoor; Editing by Ed Davies
