Poll: Another hike in BSP rates looms

The Bangko Sentral ng Pilipinas (BSP) is likely to increase interest rates again this week as inflation, a weaker peso and risks from food and energy prices grow. Twelve of 13 economists surveyed expect the Monetary Board to raise the target reverse repurchase (RRP) rate at the October 22 meeting. Most predict a 25-basis-point hike to 5.25%, while some anticipate a 50-basis-point increase.

Only one economist believes the BSP should hold rates steady. A quarter- or half-point rise would signal the fourth rate hike this year since the benchmark rate was set at 5% in August. Inflation has been the main reason for further hikes, with headline inflation jumping to 7.2% in September from 6.1% in August, surpassing the BSP's target range of 2-4%.

Core inflation, excluding volatile food and energy prices, also accelerated to 4.7%. Ateneo economic researcher Ser Percival Peña-Reyes anticipates a 25-basis-point hike due to entrenched inflation expectations, a weak peso and high global oil prices. HSBC economist Aris Dacanay also expects a 25-basis-point increase, citing inflation data that exceeded forecasts and ongoing El Niño risks.

Foreign exchange reserves have fallen by $13 billion this year, prompting concern about the need for tighter monetary policy. Despite these risks, economists generally expect the BSP to maintain a measured approach to tightening, avoiding overly aggressive increases.