Pilipinas Bangkok Central Governor Eli Lemolona attends the Spring Meetings of the International Monetary Fund (IMF) and the World Bank at the IMF Headquarters in Washington, DC, USA on Friday, April 25, 2025.
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BANGKOK — The Philippine central bank is planning for a “Godzilla” El Niño event on top of a prolonged oil shock as the Southeast Asian country tries to rein in inflation at its highest level in three years.
Governor Eli Remolona said the Pilipinas Bangko Sentral city is currently setting policies using scenarios that take into account oil prices and the severity of weather events. “A normal El Niño that happens regularly is bad, but then you have a Godzilla El Niño, and this one is really, really bad,” he told a panel discussion at the IMF and World Bank’s annual meetings in Bangkok on Wednesday.
He said the most severe impact on prices from El Niño was still to come, with the effects expected from November to February, adding that maintaining price stability remained the central bank’s priority.
“We are holding our breath, but we must prepare for the worst,” he said.
Looming weather risks are adding new pressure to one of Southeast Asia’s most fragile economies. Inflation in the Philippines accelerated to 7.2% in September from 6.1% in August, and rice prices rose 18%, according to the Philippine Statistics Authority.
The world’s largest importer of rice is also at risk to its food supply. Agriculture Secretary Francisco Tiu Laurel warned that a new drought could strain domestic supplies. If the Philippines buys more products on a larger scale, it could add demand to a global market already hurt by El Niño and export restrictions. The Food and Agriculture Organization of the United Nations raised its rice price index for the sixth consecutive month, hitting the highest level in 20 months.
The central bank raised the benchmark interest rate by 25 basis points to 5% in August in an effort to curb runaway inflation.
The BSP should hike rates by another quarter next week to 5.25%, followed by a similar rate hike in December, Alice Dakanai, senior ASEAN economist at HSBC Bank, said in a note on Wednesday.
