BSP raises its benchmark policy rate by 50 bps
The Bangko Sentral ng Pilipinas (BSP) recently raised its benchmark interest rate by 50 basis points (bps) to 3.75%, with room for additional hikes, as the Philippines battles inflation.
Additionally, the rates on the overnight deposit and lending facilities were also increased to 3.25% and 4.25%, respectively.
So far this year, the central bank has raised rates by a total of 175 bps.
BSP Governor Felipe M. Medalla said that this move was done “to anchor inflation expectations and avoid a further breach in the inflation target over the policy horizon.”
The bank also raised its 2022 inflation outlook to 5.4%, beyond the central bank’s two to four per cent target band.
Meanwhile, the 2023 and 2024 inflation projection was lowered to four per cent and 3.2%, respectively.
Medalla stated that the country’s inflation target “remains at risk over the policy horizon owing to broadening price pressures. Elevated inflation expectations likewise highlight the risk of further second-round effects.”
The BSP chief added that inflation is expected to peak in October or November this year.
