Philippines Central Bank holds monetary policy meeting

The Central Bank of the Philippines will hold a monetary policy meeting today.

Although initially scheduled for April 8, the meeting was moved forward prior to the release of inflation data tomorrow. Manilla started the year with increasing inflation—following a five-month period of low inflation—due to an unexpected sudden rise in food and transportation costs. This has pushed the Central Bank to tighten its policy and abstain from lowering interest rates, thus executing a hawkish monetary policy.

The annual inflation rate is expected to slightly increase in tomorrow’s reading. According to Central Bank Governor Eli Remolona, the base effects could see the consumer price index rise roughly 0.5% from the previous month. Moving forward, Manilla’s inflation rate will likely continue to increase during the short-to medium-term mainly due to the impact of El Nino weather —affecting agricultural produce, especially rice— increasing food prices further. While it remains uncertain if the Central Bank will continue tightening its policy, a gradual rise could likely push Manilla to slow down its hawkish monetary policy approach. Instead, depending on inflation levels, Manilla could likely employ somewhat of a laissez-faire approach in the short to medium-term.