THE Bangko Sentral ng Pilipinas is likely to raise the key interest rate by 50 basis points in its Aug. 18 meeting as inflation soars and the peso further weakens.
The central bank holds policy meetings every six weeks and raises the benchmark rate by 25 basis points if necessary.
BSP Gov. Felipe Medalla “is prepared to be more aggressive in raising its policy rates, compared to its initial gradualist stance,” reported state media Philippine News Agency.
In particular, the official noted the “BSP is prepared to raise its policy rate by 50 bps by August.”
The central bank normally raises its policy rate by only 25 basis points in one meeting.
The BSP has raised the key policy rate by a total of 50 basis points this year, which brought the interest rate to 2.5 percent in a bid to tame inflation.
Inflation accelerated to 6.1 percent in June due to the continued rise in global oil prices and other commodities. Although it is within the BSP forecast of 5.7 to 6.5 percent, it remained above the government target of 2 to 4 percent.
The BSP revised its inflation expectations upwards to 5 percent from 4.6 percent for 2022, and to 4.2 percent from 3.9 percent for 2023, before returning to within target by 2024.