LAST week’s Metro Manila minimum wage increase does not warrant an outsized interest rate adjustment, the chief of the Bangko Sentral ng Pilipinas (BSP) said.
“I don’t think we would do [a] jumbo [rate hike],” BSP Governor Eli Remolona Jr. told reporters on Friday even as he called the P85 increase, to be implemented in phases this month and in January next year, as “unusual.”
“It's not our usual shock,” he said, adding that the central bank was still assessing the potential impact on inflation.
The increase will raise the minimum wage for private sector workers in the metropolis to P780 per day. Agricultural workers will see an increase to P743.
The adjustment will be implemented in two stages: P60 starting July 19, 2026 and P25 on Jan. 20, 2027.
Remolona said there could be a “significant” impact on inflation, especially given an El Niño later this year.
“It's also a supply shock. We're also monitoring the movement of inflationary expectations,” he said.
Consumer price growth slowed to 6.8 percent in May and most economists expect it to further ease in June.
Remolona has said that inflation could remain above the 2.0- to 4.0- percent target until next year and the BSP last month raised its projection for 2026 to 6.4 percent from 6.3 percent. That for next year was also raised to 4.5 percent from 4.3 percent.
Inflationary pressures have prompted the BSP’s policymaking Monetary Board to raise key interest rates twice so far this year. The 25-basis point hikes brought the central bank’s benchmark rate to 4.75 percent.
