A TWO-MONTH suspension of rice imports could put upward pressure on inflation, Deutsche Bank Research said, which could then prompt the Bangko Sentral ng Pilipinas (BSP) to pause its easing cycle.
President Ferdinand Marcos Jr.’s order to suspend rice imports beginning September up to the end of October “could add some upsides to inflation,” Deutsche Bank Research said in a report on Monday.
“But it is unlikely to cause overshoots in inflation for a sustained period, barring any extensions to the suspension or increases in tariffs on rice imports,” it added.
This could push another BSP rate cut to December.
“Our call for BSP’s cut in December, rather than October, was motivated by this suspension,” Deutsche Bank said.
Marcos earlier this month ordered the temporary suspension of rice imports to protect local farmers during the peak of the harvest season, but Deutsche Bank said the risk of tighter domestic supply could result in higher retail prices, particularly if local production falls short of demand.
The BSP’s policymaking Monetary Board has so far trimmed key interest rates by a total of 125 basis points since August last year, with a pause this February. It will next meet on Aug. 28 and is widely expected to announce a quarter-point cut to 5.0 percent.
With the new import policy, Deutsche Bank believes monetary authorities will likely shift to a more cautious stance.
“We think that BSP may want to wait and see how this announcement may impact overall inflation before further policy easing, given the large impact that rice prices could have on inflation,” it said.
Consumer price growth slowed to a six-year low of 0.9 percent last month from 1.4 percent a month earlier, with rice inflation — at -15.9 percent from -14.3 percent in June — contributing to the decline.
Deutsche Bank expects inflation to stay below the BSP’s 2.0- to 4.0-percent target until early 2026, before returning to the range for the rest of the year.
It also lowered its 2025 forecast by 0.2 percentage point to 1.6 percent, in line with the BSP’s outlook.
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