Monetary authorities held the key policy rates of the Bangko Sentral ng Pilipinas (BSP) steady…
Stakeholders favor maintaining current levels of interest rates.
Producers of food and market experts say they are happy with present interest rate levels, but they are worried that any future increases in these rates will hurt small businesses more than help them.
The United Broiler Raisers Association (UBRA) president, Bong Inchong, stated in an interview on Monday that many members of their sector, particularly the younger ones, frequently borrow money to maintain their operations.
Although boosting interest rates is a common strategy for reducing inflation, Inchong claimed that doing so above a certain point might discourage businesspeople.
“I think current interest rates are enough to control inflation; additional rate increases might have the opposite effect,” the man stated.
If borrowing becomes unaffordable for some chicken farms, Inchong warned, it could cause some of them to halt production, further increasing food inflation.
First Grade Holdings’ president and managing director, Astro Del Castillo, expressed his optimism that the Monetary Board (MB) will decide to keep interest rates unchanged when it meets later this month.
The seasoned market expert claimed that April’s inflation rate of 6.6 percent was lower than expected, indicating that the upward price pressures have already begun to ease.
“We were expecting it (April inflation) to be around 7 to 7.1 percent, so this is a good development. It appears that the worst of it has already passed,” he continued.
However, Del Castillo did warn that geopolitical variables, including tensions in the West Philippine Sea, a likely dry spell brought on by El Nino, and a revival of animal diseases, might impact food inflation rates in the coming months.
Bruce Tolentino, a member of the MB, had stated that the prospect of continued high inflation makes it conceivable for the board to raise the BSP’s benchmark rate by another 25 basis points on May 18 during its rate-setting meeting.
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