RP can withstand more rate hikes - BSP

ABS-CBN News

Posted at Jun 19 2008 04:39 PM | Updated as of Jun 20 2008 12:39 AM

Reuters

The Philippine economy is still resilient enough to deal with further rate rises, the governor of Bangko Sentral ng Pilinas (BSP) said on Thursday.

"The economy can weather some measured tightening as and when that becomes necessary as we move on," Amando Tetangco said in an interview with Reuters.

The monetary authority raised headline interest rates by 25 basis points earlier this month in the first hike in nearly three years.

The International Monetary Fund said Manila might be behind the curve in interest rate policy but Tetangco dismissed the criticism saying this month's move was in anticipation of further spillover into the broader economy from soaring commodity prices.

He said he expected annual inflation to peak at 10-11 percent in the third quarter. Annual inflation hit a nine-year high of 9.6 percent in May.

Tetangco also said recent weakness in the peso, which hit a seven-month low at the start of the month, was likely temporary.

"There is fundamental support," he said of the currency.