The Philippine central bank is on track to raise the key rate for a fourth consecutive meeting as a severe El Niño dry spell threatens to further fan resurgent inflation.

The Bangko Sentral ng Pilipinas will increase the target reverse repurchase rate by 25 basis points to 5.25% on Thursday, according to 24 of 25 analysts in a poll. One is predicting a more aggressive, half-point hike.

The import-dependent Southeast Asian nation has already seen one of the worst spells of inflation in the region, with few subsidies to cushion the blow from the global energy shock. Now, the Philippines is bracing for the impact of El Niño weather disruptions on food prices.

A “benign” El Niño would already be a risk, but a so-called “Godzilla El Niño” would be “really, really bad news,” Governor Eli Remolona said earlier this month. “We have to worry about both those scenarios and decide on monetary policy based on that.”Policymakers have raised the key rate by a quarter-point each during the central bank’s last three meetings to rein in a stubbornly high inflation, even as the economy grew way below expectations.

Here are the things to watch for in the BSP’s policy announcement at 2:30 p.m. in Manila, followed by a media briefing at 3:00 p.m.: Consumer prices surged 7.2% in September from a year earlier, reversing four months of deceleration as renewed fighting in the Middle East sent fuel prices higher.

That brought the year-to-date inflation average to 5.4%, well above the central bank’s 3% target. The statistics agency has warned of further inflationary threats, particularly on food.

“Policymakers are also likely to be concerned about pipeline inflation risks, including the prospect of higher food prices and the continued pass-through of elevated global oil prices into domestic fuel, transport and utility costs,” Oversea-Chinese Banking Corp. senior economist Lavanya Venkateswaran said.

“Given these upside risks, the BSP is likely to prioritize anchoring inflation expectations and preventing second-round effects from becoming entrenched,” she added.

The Philippine peso breached the key psychological point of 63 per dollar for the first time last week and has traded near that level, in a development that could further increase the cost of imports and stoke inflation.

The “weak” peso adds to “imported inflation pressures, particularly through fuel and other imported goods,” said Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines.

“Peso weakness could add to imported inflation, but the bigger concerns remain elevated global oil prices and potential supply disruptions from El Niño,” Metropolitan Bank & Trust Co. chief economist Nicholas Mapa said.

Philippine economic growth slowed to 2.3% in the second quarter, the slowest since 2009 excluding the pandemic, in part due to the fallout from the energy shock and a corruption scandal.

“Slowing growth, softer labor market conditions and moderating demand argue against a more aggressive tightening cycle,” Asuncion said. “In our view, a 25-basis-point increase strikes a balance between containing inflation and avoiding an unnecessary drag on the economy.”