THE Bangko Sentral ng Pilipinas (BSP) does not see the need for a rate hike now but could consider one if oil prices reach $100 per barrel and the dollar continues to strengthen, Governor Eli Remolona Jr. said on Friday.
“For now, where the price of oil is and where the dollar is, we don’t see the need for a rate hike,” he said in an interview on CNBC.
“At some point, if the price of oil goes to, say, $100 per barrel and the dollar continues to strengthen, then we have to consider a rate hike,” he added.
Oil prices have surged as a conflict in the Middle East widened following the United States and Israeli strikes on Iran last Saturday. Brent crude futures are currently at around $87 and could go higher, analysts have warned.
The Philippines, which depends heavily on oil from the Middle East and petroleum products from Asian refineries that source crude from the region, could see fuel price spikes and pass-on effects that would stoke inflation.
The dollar, meanwhile, has strengthened in the wake of the war on Iran, putting pressure on the peso, which slid to P59 against the greenback on Friday.
Remolona said the peso’s fall “was really a dollar appreciation,” noting that other currencies had fallen as due to safe haven flows.
While the BSP chief said he was not concerned about the dollar’s strength for now, it could lead to higher inflation combined with a sharp and persistent increase in oil prices.
