Manila: The Philippine central bank on Thursday raised its benchmark interest rate by 25 basis points in an off-cycle move as it warned inflation would stay above its target till the middle of next year.
The target reverse repurchase rate was raised to 6.50 per cent, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said in a press briefing.
Remolona said there was an “urgent” need to take monetary action to temper inflation, which based on the central bank’s updated forecast would remain above its 2 per cent-4 per cent target range for this year until at least July, 2024.
“The Monetary Board deems it necessary to keep monetary policy settings tighter for longer until inflationary expectations are better anchored in a sustained downward trend,” Remolona said.
A further rate hike would be considered at its next meeting in November 16, Remolona added, if things are worse than thought.
He said policy tightening has not affected the Philippines’ growth prospects.
The Philippine peso had dropped 0.2 per cent to 56.90 per US dollar by 0703 GMT, having fallen to as low as 56.965 during Thursday’s spot trading ahead of the BSP’s decision. The peso has fallen about 2 per cent this year.
Earlier this month, the central bank had said it was ready to resume monetary tightening amid rising food and transportation prices that were driving up inflation.
In September, data from the Philippine Statistics Authority showed a double-digit gain in the price of rice drove inflation to 6.1 per cent compared to a year ago, the highest in four months.