RATE HIKE. A 50 basis points increase in the Bangko Sentral ng Pilipinas' (BSP) key rates remains possible should the February 2023 inflation rate accelerated to 9 percent level, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla says Friday (March 3, 2023). The central bank forecasts rate of price increases in the second month this year likely stayed within 8.5 to 9.3 percent. (PNA file photo)

MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla on Friday said the possibility of a 50 basis points increase in the central bank’s key policy rates remains should domestic inflation rate for February 2023 reached 9 percent.

“Well, the worst case scenario is above 9 (percent). Pag ganun (if that happens) clearly, we have to do something. Now, whether its 25 (basis points) or 50 (basis points) depends on the other data,” he told journalists after the Paleng-QR PH Plus event with the Pasig City government.

The rate of price increases countered expectations for possible peak in December 2022 after the January 2023 figure accelerated to 8.7 percent, a new 14-year high.

The BSP forecasts the February 2023 inflation to range between 8.5 to 9.3 percent.

It has been hiking its key rates since 2022 to help tame inflation rate, which breached the government’s 2-4 percent target band since 2021 due to supply-side factors.

The next rate setting meeting of the central bank's policy-making Monetary Board (MB) is slated for March 23.

Parang ang hirap sabihin na kapag 9 percent, wala kaming gagawin (it’s hard to say they will not do anything if inflation hits 9 percent),” Medalla said. “Ang gagawin namin most likely (ay) magtaas kami ng policy rate (What we’ll likely do is we’ll increase policy rate).”

Amidst projection that inflation remained elevated in February, the central bank chief reiterated its forecasts for inflation likely returning to within the government’s 2-4 percent target band by the last quarter of the year.

The Philippine Statistics Authority (PSA) is scheduled to release the February 2023 inflation report on March 7.

The BSP forecasts inflation to average at 6.1 percent this year. (PNA)