The BSP chief said that the inflation print for July “raises the probability of a 50 basis points rate hike rather than 25 basis points.”
BSP — Bangko Sentral ng Pilipinas Governor Felipe Medalla said that the inflation print for July raised the possibility of a 50 bps (basis points) rate hike in the Monetary Board’s upcoming meeting.
To recall, he earlier signaled that the central bank will continue its monetary policy tightening cycle in order to keep inflation in check.
On Friday, the Philippine Statistics Authority (PSA) reported that inflation clocked in at 6.4 percent in July amidst the rise in the prices of food as well as increases in land, sea, and air transport fares.
Medalla said at a virtual forum organized by the Federation of Filipino Chinese Chambers of Commerce and Industry Inc. (FFCCCII) that the central bank will likely deliver another aggressive policy rate hike.
According to him, the policy rate adjustment will likely be at 25 bps or 50 bps in the Monetary Board’s scheduled meeting on August 18.
“I know for sure in the next meeting, we will not have zero, we will not have 75 basis points [rate hike],” he said during the forum.
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Medalla also ruled out another surprise rate adjustment following the off-cycle hike last month.
To recall, it was late in July when the central bank delivered a hawkish off-cycle 75 bps increase in key policy rates. This brought the overnight reverse repurchase facility to 3.25 percent, overnight deposit facility to 2.75 percent, and overnight lending facility at 3.75 percent.
GMA News Online reported that the Monetary Board has already raised interest rates twice so far in 2022 — 25 bps in May and another 25 bps in June.
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