Philippines and New Zealand Central Banks Signal Rate Hikes

Central banks in the Philippines and New Zealand are signaling further interest rate increases to combat persistent inflation. Eli Remolona Jr., Governor of the Bangko Sentral ng Pilipinas, stated that while Philippine inflation eased to 6.2% in July, it is expected to remain above the 3% target through 2027 due to supply shocks and global oil prices. He noted that inflation averaged 5% during the first seven months of the year, exceeding the bank's 2% to 4% target range.

The Bangko Sentral ng Pilipinas has already raised benchmark rates twice this year to 4.75%. Remolona informed lawmakers that the Monetary Board will meet on August 27 to decide on further policy actions, asserting that the bank is prepared to take necessary steps to return inflation to target.

Similarly, economists expect the Reserve Bank of New Zealand to increase the Official Cash Rate from 2.50% during its September 2 review. Despite recent monthly drops in petrol, diesel, meat, and alcohol prices, the bank indicated that further reductions in monetary stimulus are likely required to reach its 2% inflation target midpoint. ASB economist Mark Smith forecasts the rate will move toward 3.25% by the end of the year to normalize settings.