INTEREST RATES SEEN RISING ON COSTLY OIL

THE Philippines's central bank could end up hiking policy rates by as much as 175 basis points if the price of global crude oil lingers at $100 per barrel, Japan-based think tank Nomura's said in a report.

- ANDREA E. SAN JUAN

As the conflict in the Middle East enters into its fourth week, Nomura released a special report, laying out a scenario analysis to assess the economic impacts of surging oil prices on countries, including the Philippines, which the think tank dubbed as "a large energy importer."

"As a large energy importer, the economy has significant exposures that are amplified under the negative scenario," Nomura said.

"Headline inflation could surge well above BSP’s 2 to 4 percent target and household purchasing power could be further eroded, hurting consumption spending," it added.

Nomura said the country does not maintain "strategic" oil reserves, "so a prolonged conflict could lead to energy supply shortages, which may also be exacerbated by export bans in other sources, particularly China, which accounts for 25 percent of the Philippines's refined petroleum imports."

The Japan based think tank’s forecast shows that the Philippines may end up with a 6-percent policy rate by the end of the year under the "negative scenario" or if Brent oil averages at $100 per barrel.

The Bangko Sentral ng Pilipinas (BSP) has cut rates nine times since August 2024, for a total of 225 basis points (bps)—thus reducing the policy rate to 4.25 percent from 6.50 percent.