- Poll: BSP to hike key rates by 50 bps on Thursday
- BSP chief: Not ruling out further hikes in later meetings
- Finmin says inflation may have peaked in July
MANILA — The Philippine central bank governor said on Wednesday he was not ruling out further interest rate hikes after a widely-expected tightening at the Aug. 18 policy-setting meeting.
Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla indicated a key interest rate PHCBIR=ECI could be hiked by as much as 50 basis points (bps) on Thursday.
“As to whether there will be more rate hikes in the remaining meetings (this year), we will not rule them out,” Medalla said, speaking at a forum organized by the Economic Journalists Association of the Philippines.
A Reuters’ survey of economists showed the BSP is expected to raise rates by 50bps on Thursday PHCBIR=ECI, following its surprise July rate hike.
The same poll showed there were expectations for another 25bps increase in September as the BSP catches up with its peers in containing inflation, which was running at the highest in nearly four years in July at 6.4%.
Inflation averaged 4.7% in January-July, above the BSP’s 2%-4% target band for the year.
The BSP’s policy settings, however, remain supportive of economic growth despite the current tightening cycle, and that recovery from the pandemic-induced slump has gained traction, Medalla said.
The government is sticking to its full-year economic growth target of 6.5% to 7.5% despite the recovery losing momentum in the second quarter amid soaring inflation. {nL4N2ZL0GD]
The peso has fallen about 9% this year against the U.S. dollar, the third-worst performer among Asian currencies, adding to inflation pressures.
Finance Secretary Benjamin Diokno said inflation may have peaked in July and was likely to return to within the 2%-4% target range in 2023.
—Reporting by Neil Jerome Morales, Karen Lema and Enrico Dela Cruz; Editing by Simon Cameron-Moore AND Kanupriya Kapoor