BSP to use ‘full force’ of measures to tackle inflation risks

July 28, 2022 - 6:02 PM
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Bangko Sentral Headquarters on Roxas Boulevard, Manila taken January 2021. (Patrick Roque via Wikipedia)

Philippine’s central bank is ready use the “full force” of monetary policy measures to combat inflation and support the peso currency after the U.S. Federal Reserve hiked rates by 75 basis points, its governor said on Thursday.

Bangko Sentral ng Pilipinas Governor Felipe Medalla said the Philippine economy’s “robust” growth prospects “continue to provide enough room for further tightening” of policy.

Medalla said the central bank was prepared to “manage spillover effects, from higher U.S. rates, including weakening of the peso, which if left unchecked could help push prices higher.

“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,’ Medalla said in a statement.

Medalla has ruled out another off-cycle rate increase after a surprise 75 basis points hike in July which followed back-to-back 25 basis points hikes in May and June, but he hinted at further tightening at its August 18 meeting.

The central bank’s reverse repurchase facility rate PHCBIR=ECI is currently at 3.25%.

“Looking ahead, the BSP stands ready to take all necessary monetary policy action to bring inflation back toward a target-consistent path over the medium term,” Medalla said, adding future policy decisions will be data-dependent.

—Reporting by Neil Jerome Morales, Enrico dela Cruz and Karen LemaEditing by Ed Davies