Philippine peso interest rate hike

BSP Hikes Interest Rate By Another 25 Basis Points

It’s been back-to-back rate hikes with the Bangko Sentral ng Pilipinas (BSP) announcing the decision to raise the interest rate by another 25 basis points (bps)to 6.5 percent.

BSP Rate Hikes Since 2022

  • 19-5-2022 Monetary Board raises policy rate by 25 basis points to 2.25%
  • 23-6-2022 Monetary Board raises policy rate by 25 basis points to 2.5%
  • 14-7-2022 Monetary Board raises policy rate by 75 basis points to 3.25%
  • 18-8-2022 Monetary Board raises policy rate by 50 basis points to 3.75%
  • 22-9-2022 Monetary Board raises policy rate by 50 basis points to 4.25%
  • 17-11-2022 Monetary Board raises policy rate by 75 basis points to 5.00%
  • 15-12-2022 Monetary Board raises policy rate by 50 basis points to 5.50%
  • 16-2-2023 Monetary Board raises policy rate by 50 basis points to 6.00%
  • 23-3-2023 Monetary Board raises policy rate by 25 basis points to 6.25%

BSP has followed other central banks in the region in policy tightening amid soaring inflation throughout 2022 and into 2023.

“The balance of risks to the inflation outlook for 2023 and 2024 also continue to tilt heavily towards the upside. The effect of supply shortages on domestic food prices remains a concern, while the potential impact of higher transport fares, increasing electricity rates, as well as above-average wage adjustments in 2023 point to the broader-based nature of price pressures.

“On the downside, the impact of a weaker-than-expected global economic recovery continues to be the primary factor that could dampen inflation,” the BSP media statement highlighted.

BSP also explained the board’s follow-through decisions on the monetory policy.

“Given these considerations, the Board decided that follow-through monetary action would help ease persistent price pressures from here and abroad as well as further realign inflation expectations with the target band over the policy horizon.

“Further policy tightening will also preserve the buffer against external spillovers amid heightened uncertainty and volatility emanating from financial sector distress in advanced economies.”

READ MORE: What Is Interest Rate And How Does It Work?

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