By Katherine K. Chan, A reporter
RISING OIL PRICES and long-term disruptions amid the escalating Middle East war may prompt the Bangko Sentral ng Pilipinas (BSP) to raise key policy rates just before its April meeting, Finance Secretary Frederick D. Go said.
“If the price of oil continues to persist at high levels, it is likely that the Monetary Board will consider tightening at the next meeting,” said Mr. Go, who is also a member of the Monetary Board, in an interview with Bloomberg TV on Tuesday.
The Monetary Board will hold its next rate-setting meeting on April 23.
If it does, it would be BSP fithe first rate hike in two years or from October 2023.
The Monetary Board has been on an easy path since August 2024, cutting the policy rate by 225 basis points (bps) to a three-year low of 4.25%.
It last cut borrowing costs by 25 bps in February, marking its sixth consecutive cut as it seeks to regain confidence lost in the flood control scandal.
Mr. Go said that the conflict in the Middle East lasting more than six months will seriously disrupt the economy, but anything less could cut about 10 bps from the growth of the Philippine gross domestic product (GDP).
Economists are looking at GDP growth of 5-6% this year, and 5.5%-6.5% in 2027.
Meanwhile, BSP Vice Governor Zeno Ronald R. Abenoja said external headwinds from the escalating war in the Middle East may affect the central bank’s economic recovery projections due to potential risks from the recent increase in oil prices.
“This year, we thought we had a good momentum in terms of stabilizing the overall macroeconomic environment and some pressure or some momentum in economic activity. And then we have this external shock from the Middle East,” he said during the InvestPH conference of the Philippine Stock Exchange in Taguig City on Tuesday.
Mr. Abenoja noted that the BSP is open to supporting the economy through monetary policy amid economic risks from the ongoing war.
“We continue to know the impact of the increase in oil prices in the last three weeks.ffthe results of this increase in oil prices,” said the deputy manager.
“If necessary, we should be able to respond in terms of monetary policy by supporting financial markets in our economy,” he added.
THE HEAT OF INFLATION
In a separate report, ING Think said a prolonged oil shock could push Philippine inflation to 4% or the lower end of the central bank’s target range.
“The Philippines remains one of the most exposed oil economies in the region and is likely to experience higher oil prices sooner than many of its Asian counterparts such as Thailand or Indonesia, given its low fuel prices, rapid domestic inflation and wide current account.ficit,” ING Regional Head of Research for Asia-Pacific Deepali Bhargava, Senior Economist for South Korea and Japan Min Joo Kang, and Chief Economist for Greater China Lynn Song said Monday night.
“In our context of the ongoing oil disruption for the month, the Philippines’ CPI inflation is expected to be close to the (end) upper 4% target range of the Bangko Sentral ng Pilipinas,” they added.
Local stores that sell gasoline increased the pump price again on Tuesday, gasoline increased by P12.90 to P16.60 per liter, diesel increased by P20.40 to P23.90 per liter and kerosene by P6.90 to P8.90 per liter.
This may increase the prices of gasoline to P91.60 per liter, diesel to P114.90 per liter and kerosene to P143.79 per liter, according to the Department of Energy.
The country gets about 98% of its crude oil from the Middle East, making it vulnerable to price fluctuations caused by war disruptions in the region.
Now in its third week, the war in the Middle East continues to shake oil markets around the world, especially amid the ongoing attacks and Iran’s move to block the Strait of Hormuz, an important oil transit point for almost as long. fififth of the world’s oil exports, from the US, Israel and their allies.
Emerging price pressures, the bank’s think tank added, may force the BSP to pause despite a slowing economy.
WEAK PESO
Meanwhile, ING said the Philippine peso will likely remain at the P59-dollar level next year as shocks from the Middle East war continue to weigh on the local currency.
ING economists noted that the peso may trade at P59.80 against the greenback next month before strengthening to stabilize at P59 by the end of the year.
“The risk of further oil disruptions should keep the peso weak against the USD (US dollar),” they said.
Rising oil prices amid the escalating Iran-Israel-US war dragged the peso down 13.50 centavos to close at a record low of P59.87 against the greenback on Monday, Bankers Association of the Philippines data showed. It also hit its intraday low after rising P59.95 during the recent session.
BSP Governor Eli M. Remolona, Jr. told Bloomberg News that the central bank intervened in the foreign exchange market, preventing the local unit from falling to the P60-a-dollar level.
A central bank official previously said they only enter the foreign exchange market when the peso’s depreciation begins.flthe worries of the world.
ING also noted that it now recognizes the Philippines’ current account defireceived 4% of its GDP.
The latest BSP data showed that the country’s current account deficit decreased to $16.291 billion in 2025, or -3.3% of GDP, from a deficit of 18.565 billion dollars recorded in 2024.
If the ING estimate is true, the Philippines’ current account deficit will be wider than the central bank’s projected deficit of $15.3-billion or -3% of annual GDP.
