The Bangko Sentral ng Pilipinas (BSP) is adjusting its monetary policy in response to escalating inflation, which reached 7.2% in September, up from 6.1% in August. Governor Eli Remolona highlighted the potential for a 'Godzilla' El Niño, which could exacerbate food supply issues, particularly for rice, as the Philippines is the world's largest rice importer.
The central bank has already raised its benchmark interest rate to 5% in August and is expected to increase it further to 5.25% in the coming months to combat inflation.
The UN Food and Agriculture Organization has noted a continuous rise in the rice price index, now at a 20-month high, indicating that the situation could worsen as the effects of El Niño are anticipated to peak between November and February. This scenario poses significant risks to the Philippine economy, which is already vulnerable to external shocks