Daily News

BSP may delay rate cut due to rising oil prices

The upsurge in oil prices arising from the recent drone attacks on Saudi Arabia’s oil fields is seen to temper the ability of the Bangko Sentral ng Pilipinas (BSP) or central bank to release more liquidity in the financial system. Bank of the Philippine Islands economist Emilio Neri, Jr. said that with the recent attacks reducing oil supply in the global market and putting upward pressure on oil prices, inflation in oil-importing Philippines might start climbing faster than expected in November and December of this year through 2020. A higher import bill resulting from higher oil prices is also seen to put pressure on the peso exchange rate against the dollar. With higher inflation and a peso-weakening bias, the economist said the BSP might not be able to cut either the overnight borrowing rate (reserve repurchase agreement or RRP) or the reserve requirement ratio as much as the markets had originally anticipated.