'Godzilla El Niño' is wreaking havoc with Philippine central bank's inflation forecasts — SkimNews
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- BSP Governor Eli Remolona said the central bank now sets policy using scenarios that factor in oil prices and El Niño severity, distinguishing between an "ordinary" El Niño and a "Godzilla El Niño."
- Philippine inflation accelerated to 7.2% in September from 6.1% in August, with rice prices up 18%, according to the Philippine Statistics Authority.
- Remolona said the worst of El Niño's price impact is still to come, with effects expected from November through February, adding that maintaining price stability remains the bank's priority.
- Agriculture Secretary Francisco Tiu Laurel warned a fresh drought could squeeze domestic rice supply in the world's biggest rice importer, adding demand to a global market already under strain.
- The UN Food and Agriculture Organization has raised its rice price index for six consecutive months to a 20-month high, compounding regional food inflation.
- BSP lifted its benchmark rate 25 basis points to 5% in August; HSBC's Aris Dacanay forecasts another 25 bps hike next week to 5.25%, followed by another same-sized move in December.
Why it matters: The Philippines — the world's biggest rice importer — faces compounded food and energy shocks into year-end, forcing further rate hikes despite already-tight policy. With rice up 18%, FAO's index at a 20-month high, and HSBC forecasting another 25 bps next week, monetary tightening will deepen before El Niño's worst hits.
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