(Bloomberg) -- Central banks in the Philippines and Indonesia extended their interest-rate pause on Thursday, while signaling that approaches may differ as their inflationary paths diverge.

Bangko Sentral ng Pilipinas Governor Eli Remolona said a key rate increase is on the cards at its November meeting amid upside risks to inflation. Minutes later, his Indonesian counterpart Perry Warjiyo said he sees price gains remaining within target as he held the benchmark rate at a four-year high of 5.75%.

“A rate hike is on the table for November. How big it will be will depend on the data,” Remolona told reporters in Manila after keeping the key rate at a 16-year high of 6.25%. “We’re ready to raise if the supply shocks are significant enough.”

Remolona’s remarks follow the BSP’s announcement of higher inflation forecasts for this year and next. The latest projection for 2024 of 3.5% brings it closer to the top-end of the central bank’s 2%-4% target for average price gains while the 5.8% estimate for 2023 puts it farther from the range.

What Bloomberg Economics Says...

We expect BSP to hike by 25 bps at its next meeting on Nov. 16. It has plenty of reasons. Prices for fuel and food essentials are soaring again. The peso is under renewed downward pressure, intensified by the Federal Reserve’s more hawkish signaling and imports bulging from the higher costs of fuel and food. 

—Tamara Mast Henderson, Asean economist

For the full note, click here

Among the world’s biggest rice importers, the Philippines is vulnerable to price shocks induced by India’s export restrictions. Reports of hoarding by domestic traders have also pushed up prices of the staple grain, prompting President Ferdinand Marcos Jr. to cap rice prices earlier this month.

Indonesia, which also saw rice costs shoot up by nearly 14% year-on-year, sees its situation as more manageable as headline inflation has stayed within the central bank’s target at 3.27% in August. Still, it indicated rate cuts aren’t on the table despite lawmakers calling for a “bold but measured” step toward easing monetary policy.

“There is room to review BI’s interest rate policy” including to support economic growth given the low inflation environment, Warjiyo said in a separate briefing in Jakarta. “The problem is that the global economy is very uncertain, especially now that the dollar is getting stronger.”

The rupiah edged higher against the greenback to 15,375 after the decision. The currency has dropped nearly 1% this month, weighed by foreign outflows as investors grew tepid over emerging assets over the Fed’s higher-for-longer rate signal.

Bank Indonesia has in recent months used tools other than rates to achieve its monetary goals. That includes new rupiah securities called SRBI, whose sale attracted almost 38 trillion rupiah ($2.5 billion) in its first two auctions. The FX term deposit for exporters received the highest fund so far earlier this month. 

--With assistance from Norman Harsono, Yudith Ho, Soraya Permatasari, Tomoko Sato, Ditas Lopez, Cecilia Yap, Manolo Serapio Jr., Cliff Venzon, Andreo Calonzo and Claire Jiao.

(Updates with details throughout.)

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