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Interest Rate Hike in the Phils

The Bangko Sentral ng Pilipinas (BSP) hiked its policy rates by 25 basis points Thursday after keeping this at record-low since July 2009 on account of the increasing inflation pressures.

The central bank’s overnight borrowing or reverse repurchase (RRP) facility rate is now at 4.25 percent and the overnight lending or repurchase (RP) facility rate at 6.25 percent, both of which were increased after maintained at record-low for 14 consecutive MB policy meetings.

BSP Governor Amando Tetangco Jr., in a briefing Thursday, said prices of food and oil commodities in the international market continue to rise due to strong demand for as well as supply constraints.

He said this has affected domestic inflation rate placing this year’s three to five percent inflation target “at risk”, thus, central bank’s policy-making Monetary Board (MB) decided “to act promptly to rein in inflation expectations.”

“The Monetary Board believes that a preemptive response will minimize the overall impact of rising inflation on domestic economic activity by helping to firmly anchor the public’s inflation expectations,” he said.

The BSP chief explained that “well-anchored inflation expectations would safeguard price stability and, therefore preserve the public’s purchasing power.”

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