BSP signals further rate hike after Fed raises rates

·2 min read

THE Bangko Sentral ng Pilipinas on Thursday signaled its readiness to further hike interest rates in the country after the US Federal Reserve again imposed another aggressive rate hike.

The Fed on Thursday delivered a 75-basis point increase in interest rates to help tame persistent inflation.

“The action of the US Federal Reserve, along with the tightening of global financial conditions and broadening uncertainty over global growth prospects, could continue to drive exchange rate movements in emerging market economies, including in the Philippines,” BSP Gov. Felipe Medalla said in a statement.

In order to manage the spillover effects of such external developments, the BSP is prepared to utilize the full force of available measures in order to address the potential risks to Philippine inflation and inflation expectations arising from an overshooting or excessive depreciation of the Philippine peso.

“At the same time, the BSP will continue to be guided by its assessment of the domestic and global developments that affect the outlook for inflation and growth,” the central bank chief said.

Looking ahead, the BSP said it stands ready to take all necessary monetary policy action to bring inflation back toward a target-consistent path over the medium term.

Further monetary policy adjustment will be carried out in the coming months commensurate with the primary objective of preventing inflation from becoming further entrenched.

The BSP believes the Philippines’ robust economic prospects continue to provide enough room for further tightening of the monetary policy stance. As always, the BSP’s future monetary policy decisions will remain guided by data outcomes for the Philippine economy.​

The Philippine central bank has so far raised its benchmark interest rate by 125 bps this year to 3.25 percent, after keeping it at a record low of two percent for almost two years to support the economy amid the pandemic. /

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