The Monetary Board raised the BSP key policy rate by 50bps.
The Monetary Board raised the key policy rate of the Bangko Sentral ng Pilipinas (BSP) anew by 50 basis points (bps).
On Thursday, the central bank raised its policy rate by 50bps hours after the US Federal Reserve (Fed) announced another aggressive rate hike. The central bank’s move takes the overnight reverse repurchase rate to 4.25%.
ABS-CBN News reported that the central bank’s latest rate hike followed the 50-bps in August and the off-cycle 75-bps adjustment in July as inflation soared in the previous months because of supply constraints and the global energy crisis.
Inflation quickened to 6.4% in July before slightly cooling to 6.3% in August.
Prior to announcing the Monetary Board’s latest policy rate settings, BSP Governor Felipe Medalla said that the BSP’s policy rate is “still accommodative” despite the normalization of policy settings.
The BSP chief also said that interest rate environment that still has some room for adjustment as the central bank pledged to do all that’s needed to bring down the elevated inflation.
Medalla earlier said that inflation is expected to remain elevated in the coming months and the central bank is ready to use its monetary tools.
However, Finance Secretary Benjamin Diokno earlier said that inflation could have peaked in July. Medalla said that raising interest rates could help in stabilizing the peso.
Based on a report, raising interest rates could have an impact on growth but both Diokno and Medalla have said that the Philippine economy is robust enough to absorb the impact.
On Wednesday (Thursday Manila time), Fed Chairman Jerome Powell announced a third 75-bps rate increase despite worries over a possible recession.