Eli Remolona, governor of the Bangko Sentral ng Pilipinas, during the Spring meeting of the International Monetary Fund (IMF) and the World Bank at the IMF headquarters in Washington, DC, USA, Friday, April 25, 2025.
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BANGKOK – The Philippines’ central bank is projecting a “Godzilla” El Niño on top of a prolonged oil shock, as the Southeast Asian country tries to rein in inflation from a three-year high.
Governor Eli Remolona said the Bangko Sentral ng Pilipinas is now setting policies using scenarios that affect oil prices and the severity of weather events. “We have a normal, regular, bad El Niño, and then we have a Godzilla El Niño, which is really bad,” he said Wednesday on a panel at the IMF and World Bank’s annual meeting in Bangkok.
The worst impact of El Niño on prices is yet to come, with effects expected from November to February, he said, adding that maintaining price stability remains the central bank’s priority.
“We’re holding our breath,” he said, “but we have to prepare for the worst.”
Persistent weather risks are adding new pressure to one of Southeast Asia’s most vulnerable economies. Philippine inflation accelerated to 7.2% in September from 6.1% in August, with rice prices rising 18%, according to the Philippine Statistics Authority.
The world’s largest importer of rice is also exposed to food supply risks. Agriculture Secretary Francisco Tiu Laurel has warned that the drought could reduce domestic supplies. Greater Philippine purchases could boost demand to global markets that have been disrupted by El Niño and exports. The United Nations Food and Agriculture Organization has raised its rice price index for six consecutive months to a 20-month high.
The central bank raised its benchmark rate by 25 basis points to 5% in August to keep inflation at bay.
The BSP should post a quarter-percentage point hike next week to 5.25%, followed by an increase of the same size in December, according to Aris Dacanay, senior ASEAN economist at HSBC Bank, in a note on Wednesday.