Eli Remolona, governor of the Bangko Sentral ng Pilipinas, during the International Monetary Fund (IMF) and World Bank Spring meetings at the IMF headquarters in Washington, DC, US, on Friday, April 25, 2025.
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BANGKOK — The Philippine central bank is planning for a “Godzilla” El Niño on top of a prolonged oil shock, as the Southeast Asian nation tries to rein in inflation from three-year highs.
Governor Eli Remolona said Bangko Sentral ng Pilipinas now sets policy using scenarios that factor in oil prices and the severity of the weather event. “We have the regular, ordinary El Niño, which is bad, and then we have the Godzilla El Niño, which is really, really bad,” he said Wednesday on a panel at the IMF and World Bank annual meetings in Bangkok.
The worst of El Niño’s impact on prices is still to come, with the effects expected from November through 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 be prepared for the worst.”
The looming weather risk is adding fresh pressure on one of Southeast Asia’s most vulnerable economies. Philippine inflation accelerated to 7.2% in September from 6.1% in August, with rice prices up 18%, according to the Philippine Statistics Authority.
The world’s biggest rice importer is also exposed to food supply risk. Agriculture Secretary Francisco Tiu Laurel has warned that a fresh drought could squeeze domestic supply. Larger Philippine purchases could add demand to a global market already jolted by El Niño and export curbs. The UN Food and Agriculture Organization has raised its rice price index for six consecutive months to a 20-month high.
The central bank lifted its benchmark rate by 25 basis points to 5% in August to keep a lid on the runaway inflation.
The BSP should deliver another quarter-percentage hike next week to 5.25%, followed by another same-sized hike in December, according to Aris Dacanay, senior ASEAN economist at HSBC Bank, in a note Wednesday.
