BSP has room to cool down inflation despite weakening peso: analyst

ABS-CBN News

Posted at Sep 22 2022 12:26 PM

MANILA - The Bangko Sentral ng Pilipinas has room to cool down inflation despite the continued peso depreciation against the dollar, an analyst said on Thursday.

The overperforming US dollar is affecting most of the global currencies, RCBC Trust and Investment Group Head Robert Ramos told ANC. 

The peso closed at P58 to $1 on Wednesday, registering its all-time low.

A continued dollar rally is expected after the US Federal Reserve implemented another big time interest rate hike.

"I believe the reference that we should have is that the USD is strengthening against all the other currencies. If it’s just the Philippine peso losing ground against the US dollar, then we will probably be more concerned," Ramos said.

"Given that, the BSP can do whatever it is supposed to do which is of course monitor our current inflation and act accordingly, raise [interest rate] when there is opportunity to raise," he added.

Inflation slightly eased to 6.3 percent in August from 6.4 percent in July, above the government target of between 2 to 4 percent. It is expected to remain elevated for the rest of 2022.

Ramos said he is expecting the central bank to raise its key interest rate by 50-basis points during its another monetary policy announcement on the afternoon of Sept. 22.

The BSP raised the country's benchmark interest rate to 3.75 percent last Aug.18 to tame inflation.

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