The Bangko Sentral ng Pilipinas (BSP) raised rates anew on Thursday, Aug. 9, in a more aggressive move as expected, to arrest faster inflation while economic growth has softened.
The Monetary Board raised policy rates by 50 basis points (bp), marking the third consecutive tightening move this year.
“The Monetary Board noted that latest baseline forecasts have shifted higher over the policy horizon, indicating some risk of inflation exceeding the target in 2019,” BSP Governor Nestor A. Espenilla, Jr. said.
The BSP tightened rates by 25bp each during their May and June meetings, at a time when monthly inflation started to log beyond four percent. Policy makers saw that tighter benchmark yields are needed to arrest second-round effects of tax reform, particularly on wages and other consumer goods.
Prices of widely-used goods surged to 5.7% in July, beating market expectations which brought the seven-month average to 4.5%, well above the 2-4% target range. — Melissa Luz T. Lopez