MANILA - The Bangko Sentral ng Pilipinas on Thursday signaled its readiness to further hike interest rates in the country after the US Federal Reserve again implemented another aggressive rate hike.
The Fed hiked US rates by 75 basis points, which was the second straight time it did this, and the fourth time it hiked rates this year, amid rising inflation.
The BSP also said the Fed’s actions could affect the peso, which regained some ground in recent days following President Ferdinand Marcos’ first State of the Nation Address.
“In order to manage the spillover effects of such external developments, the BSP is prepared to utilize the full force of available measures in order to address the potential risks to Philippine inflation and inflation expectations arising from an overshooting or excessive depreciation of the Philippine peso,” BSP Governor Felipe Medalla said in a statement.
The BSP just recently implemented an off-cycle 75 bps hike in its benchmark rate after inflation quickened to 6.1 percent in June, and as the peso touched historic lows, which analysts said further stoked inflation.
“Looking ahead, the BSP stands ready to take all necessary monetary policy action to bring inflation back toward a target-consistent path over the medium term,” Medalla said.
He said “further monetary policy adjustment will be carried out in the coming months commensurate with the primary objective of preventing inflation from becoming further entrenched.”
Medalla also reiterated that the BSP believes the Philippines can absorb further rate hikes and still grow due to its “robust economic prospects.”
The Philippine central bank has so far raised its benchmark interest rate by 125 bps this year to 3.25 percent, after keeping it at a record low of 2 percent for almost 2 years to support the economy amid the pandemic.