BSP's jumbo rate hike seen to address inflation, weakening peso: analyst

The central bank’s off-cycle 75-basis points interest rate hike could help address both the elevated inflation and depreciating peso, an analyst said Thursday.

"I would say the rate hike addressed both concerns. Weakening peso, in fact, would lead to further inflation since the cost of commodities would seem to increase in the light of depreciating peso,” RCBC Trust and Investment Group head Robert Ramos told ANC.

The Bangko Sentral ng Pilipinas on Thursday announced the surprise interest rate hike which brought the benchmark to 3.25 percent from 2.5 percent effective immediately to tame inflation.

The monetary policy adjustment was implemented ahead of the BSP’s policy setting meeting on Aug. 18 and the US Federal Reserves rate hike announcement by the end of the month.

Inflation accelerated to 6.1 percent in June while the peso is hovering near record low at P55 to P56 level against the dollar.

• In surprise move BSP hikes benchmark rate by 75 basis points
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