The International Monetary Fund, or IMF, on Wednesday said it supports the tightening of monetary policy by central banks in Asia's emerging economies as inflation risks have resurfaced.

In the IMF's briefing of the Regional Economic Outlook: Asia and Pacific in Singapore, IMF regional director Krishna Srinivasan said developing economies in Asia like the Philippines are again up against local and global challenges which might trigger higher inflation rates in the next months.

Srinivasan cited among the lingering challenges as China's gloomy property sector, tight policy stances worldwide, trade disruptions from the Russia-Ukraine war, and growing geoeconomic fragmentation.

"Headline inflation has declined from post-pandemic peaks as global commodity prices have receded and monetary policy bites, albeit with signs of renewed price pressures emerging more recently," the IMF director said.

"With still accommodative financial conditions in Asia's emerging markets and the upside risks mentioned above, there is no urgent need to ease monetary policy," Srinivasan continued.

Data from Bloomberg yesterday showed global oil price benchmarks WTI Crude rose by 2.26 percent to $88.62 per barrel, while Brent Crude was up by 2.02 percent to $91.72 per barrel amid the escalating Israel-Hamas war.

Philippine inflation last month quickened again to 6.1 percent from 5.3 percent in August and 4.7 percent in July due to higher food and transport costs.

Rice emerged as the top contributor to food inflation after India banned exports of its non-basmati white rice, triggering price hikes in the commodity in other Asian countries.

To rein in inflation, the Bangko Sentral ng Pilipinas, or BSP, has raised its policy rate by 425 basis points to 6.25 percent.

BSP Governor Eli Remolona Jr. on Wednesday told the media the central bank's Monetary Board will analyze recent market and other economic data on Tuesday next week to determine its next rate decision. "On Tuesday, we will gather data and run models again," he said.

Rate increase in offing

When asked about his policy rate assessment so far, Remolona seemed to echo his previous answer.  "You know where I'm leaning toward," he said.

In a previous interview, Remolona said the Monetary Board is considering a rate hike, given the higher September inflation rate and the Middle Eastern war.

Economists said the BSP's Monetary Board might further raise its rate this year given the aforementioned factors. They also see possible food supply issues to accelerate inflation as the dry months from El Niño might slow agricultural production until the first quarter next year.

However, the IMF said most Asian economies will likely reach their slower inflation targets by the end of next year as their central bank's monetary tightening and foreign exchange rate measures take effect over time. The BSP aims to hit an inflation rate of 3 percent in the first quarter next year.

"Except for Japan, inflation is expected to return to within target ranges by the end of 2024. This puts Asia ahead of the rest of the world in terms of disinflation, although the risk of more persistent inflation could materialize, given recent commodity price spikes (oil and rice prices), and exchange rate changes yet to fully pass through," Srinivasan said.