The Philippine central bank increased its benchmark rate by a half-point, sustaining the pace of outsized moves after inflation bolted at the start of the year.
(Bloomberg) — The Philippine central bank increased its benchmark rate by a half-point, sustaining the pace of outsized moves after inflation bolted at the start of the year.
Bangko Sentral ng Pilipinas raised the overnight borrowing rate by 50 basis points to 6% on Thursday, as seen by 13 of 25 analysts in a Bloomberg survey, with the rest predicting a quarter-point increase.
Red-hot inflation is fueling bets for higher-for-longer tightening cycle by BSP, clashing with signals from Governor Felipe Medalla in January that the key rate could peak this quarter.Â
The monetary authority has since said more work is needed to curb inflation pressures, after consumer prices rose to a new 14-year high in January. Economic growth holding up could give space for the BSP to sustain its most-aggressive monetary tightening in two decades.
BSP’s rate trajectory sets the economy apart from peers in Southeast Asia, where inflation is on a downtrend. Malaysia applied the brakes on rate actions last month.
Borrowing costs have risen by 400 basis points since May last year to the highest since November 2008. The latest move is the fourth half-point increase by BSP.
–With assistance from Tomoko Sato, Michael J. Munoz, Cecilia Yap, Clarissa Batino and Karl Lester M. Yap.
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