Philippines' 'robust' economy can absorb 75-bps rate hike: Finance chief

ABS-CBN News

Posted at Jul 14 2022 04:52 PM

MANILA - The Philippine economy is strong enough to absorb the impact of Thursday's 75-basis points interest rate hike implemented by the central bank, Finance Secretary Benjamin Diokno said.

 "The economy continues to be robust to absorb the recent monetary policy rate increase by the Bangko Sentral ng Pilipinas (BSP), given the favorable expansion of economic activity early this year," Diokno said in a statement.

The BSP's largest rate hike to date brought the benchmark policy rate to 3.25 percent. It earlier implemented back-to-back 25 bps hikes in May and June. 

“The [Development Budget Coordinating Committee’s (DBCC)] target range for the GDP growth rate has been set to be able to incorporate the various pace of monetary policy normalization by the BSP,” Diokno said. 

The DBCC lowered the economic growth target for 2022 to between 6.5 to 7.5 percent from the revised 7 to 8 percent.

Diokno added that the economy was growing even when the policy rate was at 4 percent. He added that the economy could be back to prepandemic level by mid or in the third quarter of 2022. 

The gross domestic product expanded faster than anticipated by 8.3 percent in the first quarter of 2022.

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