(PNA file photo)
MANILA – Food producers and market analysts say they are content with current interest rate levels, expressing concern that prospects of further hikes in key rates may do small entrepreneurs more harm than good.
In an interview on Monday, Bong Inchong, president of the United Broiler Raisers Association (UBRA), said many members of their industry, especially the newer ones, regularly borrow money to sustain their operations.
Inchong said that while raising interest rates is a tool often used to curb inflation, increasing them beyond a certain threshold may serve as a disincentive to businessmen.
“I think current interest rates are enough to control inflation, additional rate increases might have the opposite effect,” he said.
Inchong said some poultry growers might be forced to suspend operations if borrowing is put beyond their reach, and this can lead to a decline in supply, which in turn will further trigger food inflation.
For his part, Astro Del Castillo, president and managing director at First Grade Holdings, said he is hopeful that the Monetary Board (MB) will decide to maintain status quo on interest rates when it meets later this month.
The veteran market analyst said the 6.6 percent April inflation rate was lower than predicted, which indicates the upward price pressures are already waning.
“This is really a positive development because we were expecting it (April inflation) to be around 7 to 7.1 percent. It seems that the worse is already behind us,” he added.
Del Castillo cautioned, however, that geo-political factors, such as tensions in the West Philippine Sea, a potential dry spell caused by El Niño, and a resurgence of livestock diseases might affect food inflation figures in coming months.
Meanwhile, MB member Bruce Tolentino earlier said another 25 basis points hike in the BSP’s key rate during the board’s rate-setting meeting on May 18 is possible due to expectations that inflation will remain elevated. (PNA)
