MANILA (Update 3:56 p.m.) — The Philippine central bank raised its key interest rate by 25 basis points to 4.75% on Thursday, it said in a statement.
Twenty of 25 economists in a Reuters poll expected the Bangko Sentral ng Pilipinas to hike its overnight borrowing rate PHCBIR=ECI by 25 basis points. Five others projected a 50-basis-point hike to 5%.
“Today’s policy action will help keep inflation expectations anchored and mitigate the risk of second-round effects,” the BSP said in its statement.
The move follows a 25-basis-point increase at the previous meeting in April as the BSP tightened monetary policy to keep a lid on inflation.
The central bank held an off-cycle meeting on March 26 when it decided to hold rates, the first such move by a central bank in Asia in response to the Middle East conflict, reflecting heightened concerns about its impact on inflation and growth.
Annual inflation eased to 6.8% in May from the previous month’s 7.2%, driven mainly by slower increases in food and transport costs. The annual pace of consumer price growth remained above the BSP’s 3% goal for a third straight month.
—Reporting by Karen Lema, Mikhail Flores and Nestor Corrales; Editing by John Mair and David Stanway