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MANILA -- Interest rates in the Philippines may remain high much longer than in other ASEAN countries as inflation in the country remains elevated, a regional research group said on Wednesday.

The Bangko Sentral ng Pilipinas kept its benchmark rate steady at 6.25 percent in its last policy-setting meeting in August. The central bank has been maintaining this rate since March.

According to the ASEAN+3 Macroeconomic Research Office (AMRO) the BSP may need to keep its policy rate at its current level much longer than most Southeast Asian economies.

In a press briefing on Wednesday, AMRO Chief Economist Hoe Ee Khor said this will depend on factors such as food prices, which he noted were “a bit of an uncertainty at the moment.”

Inflation hit a 14-year high of 8.7 percent in January on the back of spiraling food and fuel prices. The rate eased in the following six months but started accelerating again in August.

• Inflation quickens to 5.3 pct in August as rice, fuel costs rise

Khor pointed out that the BSP has also acknowledged the need to maintain the status quo until inflation falls within the government’s 2 to 4 percent target range.

“Even the (BSP) Governor has expressed that interest rates will have to stay high until inflation comes down to within the target band. He has not ruled out even another increase in rates if necessary,” said Khor.

• BSP keeps benchmark rate steady at 6.25 percent

Despite the recent uptick in food prices, Khor said the full-year inflation should still settle at 5.5 percent this 2023 before easing further to 3.8 percent, or within target, by 2024.

“It’s already moderating. There’s just an uptick now because food prices have picked up. But we think that some of the supply shocks are transitory,” he said.

Still, Khor said the threat of El Niño and its impact on food prices remains.

“We need to see going forward how bad this El Niño is. If it gets worse, then I think food prices will go up not just in the Philippines but in the rest of the region,” he said.

Meanwhile, AMRO projects that the Philippine economy will expand by 5.9 percent this year, below the lower band of the government’s 6 to 7 percent growth target.

“We are still quite bullish on the Philippines compared to consensus. The Philippines has surprised us in the last two years because domestic demand is quite strong and is holding up quite well despite the increase in interest rates. And we think this will continue,” said Khor.

• PH economic growth to settle at 5.9 pct in 2023: AMRO