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BSP hikes rates to contain ‘elevated’ inflation

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Espenilla-Guinigundo-062018
Video screenshot of central bank Gov. Nestor A. Espenilla (L) and Deputy Gov. Diwa C. Guinigundo during the BSP's announcement of policy rate hike on June 20.

By Melissa Luz T. Lopez, Senior Reporter

The Bangko Sentral ng Pilipinas (BSP) raised rates on Wednesday, June 20, following a similar move in May in a bid to arrest future inflation and keep local yields competitive.

The Monetary Board raised policy settings by another 25 basis points (bp) during their fourth review for the year. Rates now stand at 4% for the overnight lending rate, 3.5% for the overnight reverse repurchase rate, and 3% for the overnight deposit rate.

The decision came as inflation expectations “remain elevated” for 2018, BSP Governor Nestor A. Espenilla, Jr. said during Wednesday’s briefing.

The BSP also tightened rates by 25bp during their May 10 meeting. Back then, policy makers saw the “timely increase” in benchmark yields “will help arrest” possible second-round effects, as it would temper inflation expectations.

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