Oil shock may prompt BSP rate hike

OIL PRICE SHOCKS may prompt the Bangko Sentral ng Pilipinas (BSP) to hike its policy rate as early as its next meeting in April amid the risk of inflation breaching the central bank's target band in March, an economist said.

- Katherine K. Chan

Security Bank Chief Economist Angelo B. Taningco sees the BSP reversing its policy path in April but ruled out an off-cycle move as the central bank has "room to wait."

"In this episode of an oil shock, it is more broad-based. It also affects the other energy supplies, natural gas. And there are ripple effects coming from this because of the shipping disruption at the Strait of Hormuz, which I think will not be reopened anytime soon," Mr. Taningco told Money Talks with Cathy Yang on One News on Thursday.

"So, in that regard, to basically manage inflation expectations, I think that a rate hike is warranted," he added.

If realized, it would be the first time in over two years or since October 2023 that the central bank will tighten its monetary policy.

The BSP has been on an easing path since August 2024, delivering a total of 225 basis points (bps) in cuts to bring the key interest rate to 4.25%.

BSP Governor Eli M. Remolona, Jr. has opened the door for a potential rate hike once oil price hits over $100 per barrel amid concerns that it could bring inflation above 4% or the upper end of their target band.

The Monetary Board's next policy meeting is on April 23.

Local fuel retailers on Tuesday raised oil prices by double digits for the first round of their planned staggered hikes.

Gasoline prices were increased by P7 to P13 per liter, while diesel prices were up P17.50 to P24.25 per liter and kerosene by as much as P32 to P38.50 per liter.