BSP Governor Ramps Up Hawkish Rhetoric

BSP Governor Remolona ramped up the hawkish rhetoric further yesterday. He stated that the central bank is prepared to hike rates off-cycle before the next scheduled policy meeting on November 16 in a Bloomberg interview.

• The central bank is watching upside risks from energy and transport prices. If they materialize then the central bank is likely to hike by 25bps at the November policy meeting.
• Remolona stated that an off cycle move would allow the BSP to be more aligned with the Fed, should it hike at its early November meeting.
• The Governor reiterated the central bank is determined to bring inflation back to the 2-4% target and noted the Philippines is more impacted (from an import standpoint) by higher oil/rice costs compared to other Asian economies.
• Note the September CPI print is out on October 5th, which is next Thursday.
• They are prepared to see slower growth to bring down inflation pressures. The BSP expects GDP growth of 4.9% this year and 4.5% next year.
• Remolona also stated that the resistance level in USD/PHP was last at 57.00. We haven't breached this level so far in 2023, but have tested it a number of times since mid-August. Note USD/PHP closed at 56.775 yesterday.