MANILA — The Bangko Sentral ng Pilipinas is prepared to raise interest rate by 50-basis points in its Aug. 18 meeting, BSP Governor Felipe Medalla said, as inflation soars and as the peso weakens further.
The central bank holds policy meetings every 6 weeks and raises the benchmark rate by 25-basis points if necessary, anchored on the inflation and other data on hand, Medalla said in a statement.
"When we have to because of inflation, we normally raise our policy rate (the interest we pay on our overnight borrowing from banks to guide bank lending rates) by only 25 basis points in one meeting," Medalla said.
"That we are going to raise by 50 in our next meeting this August means we are not as gradualist as before," he added.
The BSP has raised the key policy rate by a total of 50-basis points this year, which brought the interest rate to 2.5 percent in a bid to tame inflation.
Inflation accelerated to 6.1 percent in June due to the continued rise in oil prices and other commodities. Although it is within the BSP forecast of 5.7 to 6.5 percent, it remained above the government target of 2 to 4 percent.
President Ferdinand Marcos Jr this week said he "disagreed" with the inflation numbers. Finance Secretary Benjamin Diokno clarified that the President was talking about the year-to-date average which is currently at 4.4 percent.
Marcos also said much of the inflation was "imported."
"Strong global factors" are indeed pushing the inflation numbers up, Medalla said.
"In fact, inflation in many countries have risen faster than in our country. We don't want the currently high inflation to make Filipinos to expect that the high inflation would persist even after the global factors that triggered it have subsided," Medalla said.
The BSP revised its inflation expectations upwards to 5 percent from 4.6 percent for 2022, and to 4.2 percent from 3.9 percent for 2023, before returning to within target by 2024.