The Bangko Sentral ng Pilipinas (BSP) is likely to keep its benchmark interest rates unchanged in its upcoming policy meeting, despite mounting inflationary pressures driven by rising global oil prices, according to a report by Capital Economics cited by the Manila Bulletin. Analysts suggest the central bank may prioritize economic stability over immediate inflation control.
Oil prices have surged in recent weeks due to geopolitical tensions and supply constraints, pushing inflation higher in import-dependent economies like the Philippines. The BSP has previously signaled a cautious approach, balancing growth concerns with price stability. ‘The central bank is walking a tightrope,’ said one Manila-based economist. ‘Aggressive rate hikes could stifle recovery, but ignoring inflation risks could erode public confidence.’
Philippine inflation rose to 4.7% year-on-year in February, nearing the upper bound of the BSP’s target range. However, core inflation—which excludes volatile food and energy prices—remains within manageable levels, giving policymakers room to delay tightening. ‘The BSP has tools beyond rate hikes, such as reserve requirements or liquidity measures,’ noted a financial analyst.
Looking ahead, economists warn that prolonged oil price volatility could force the BSP’s hand later this year. ‘If inflation expectations become unanchored, the central bank may have to act more decisively,’ said a regional strategist. Meanwhile, market participants are closely monitoring the U.S. Federal Reserve’s moves, which could influence BSP policy.