The Bangko Sentral ng Pilipinas (BSP) will increase interest rates by another 75 basis points in its November 17 meeting to match the US Federal Reserve’s recent policy action.
On Thursday, hours after the US Federal Reserve’s announcement of a 75 basis point rate (bps) hike, BSP Governor Felipe M. Medalla said the Monetary Board will be raising interest rates by the same amount in two weeks.
Medalla noted that while the announcement of a 75 bps rate hike was announced on Thursday, the increase in interest rates will be effective only after the November 17 meeting.
“As expected, the Fed increased its policy rate this morning (Manila Time) by 75 bps. This supports the BSP’s stance to hike its policy rate by the same amount in its next policy meeting on November 17,” Medalla said.
“The BSP deems it necessary to maintain the interest rate differential prevailing before the most recent Fed rate hike, in line with its price stability mandate and the need to temper any impact on the country’s exchange rate of the most recent Fed rate hike,” he added.
This rate hike will be the fourth time the BSP raised interest rates this year. The last increase was in September when the Monetary Board decided to raise its interest rates by 50 basis points to 4.25 percent.
Medalla assured the public that the BSP continues to monitor risks to the inflation outlook and is ready to take the necessary policy actions to bring inflation down to the 2 to 4 percent target.
“By matching the Fed’s rate hike, the BSP reiterates its strong commitment to its mandate of maintaining price stability by aggressively dealing with inflationary pressures stemming from local and global factors,” Medalla said.
“The BSP remains vigilant in monitoring all risks to the inflation outlook and is prepared to take necessary policy actions to bring inflation toward a target-consistent path, wherein the average year-on-year headline inflation will be within the target band of 2 to 4 percent in the second half of 2023 and in the full year of 2024,” he added.
The October inflation print will be released by the Philippine Statistics Authority (PSA) on Friday. BSP expects last month’s inflation to be within 7.1 to 7.9 percent.
Image credits: Patrick Roque via Wikimedia Commons CC BY-SA 4.0
BSP to increase interest rates by 75bps
Source: News Paper Radio
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