Another 100-bps rate hike by the BSP unlikely to hurt economy: analyst

ABS-CBN News

Posted at Jul 19 2022 03:59 PM | Updated as of Jul 19 2022 04:52 PM

MANILA - Another 100-basis points interest rate hike by the Bangko Sentral ng Pilipinas is unlikely to hurt the Philippines' economic recovery, an analyst said Tuesday.

The central bank earlier announced an off-cycle 75-bps interest rate hike which brought the key policy rate to 3.25 percent after inflation in June shot up to 6.1 percent.

A 100-bps hike will bring the overnight borrowing rate to over 4.25 percent.

"We’re looking at at least 100 bps that would bring it up to above 4 percent on the policy rate. This level was the level we had back in 2018 so this level is not yet harmful for the economy Sun Life Investment Management and Trust Corp president and CIO Mike Enriquez told ANC. 

Finance Secretary Benjamin Diokno earlier said the country's robust economy could absorb the impact of the huge rate hike.

Analysts have said that the BSP needs to keep pace with the US Federal Reserve, which has been hiking rates aggressively to tame inflation in the world's largest economy. 

The Fed's aggressive hikes had boosted the strength of the US dollar, resulting in the rapid depreciation of many currencies, including the Philippine peso.

The weak peso is also seen contributing to the quickening pace of inflation. 

The BSP is set to have another monetary policy meeting on August 18.

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