Zephyrnet Logo

The Philippine central bank slows the rate increase pace

Date:

Despite persistently rising inflation, the Philippine central bank increased its benchmark interest rate by a quarter of a percentage point. The instability in the global banking industry has increased concern about the economic future.

The benchmark overnight borrowing rate for the Philippines will rise by 25 basis points to 6.25% from 6.75% beginning of Friday, the Bangko Sentral ng Pilipinas announced on Thursday. The Wall Street Journal questioned eight economists, and seven predicted the central bank would hike the policy rates by a quarter percentage point. In contrast, one predicted an increase of 50 basis points.

Although continuous strong inflation keeps the central bank leaning toward tightening, some economists have suggested that with the crisis in the world banking industry, authorities may favor softer rate hikes. At its last two policy meetings, the central bank of the Philippines increased the policy rates by half a percentage point.

Consumer prices in the nation increased 8.6% in February from a year earlier, significantly more than the central bank’s 2% to 4% inflation target range. Its fourth-quarter gross domestic product climbed 2.4% from the third quarter and 7.2% from a year earlier.

Central banks throughout the world swiftly increased rates after years of policy stimulus to tamp down soaring inflation brought on by the recovery from the COVID-19 outbreak and the Russia-Ukraine war.

Since May, the Philippine central bank has been gradually raising its rate, having increased it for the first time in three and a half years from 2.00%.

The Federal Reserve approved a quarter-point rate rise on Wednesday, but the bank sector turbulence may have an earlier impact than first thought two weeks ago.

Interest rates in the Philippines were increased by 25 basis points

The increase raised the total rate hikes the central bank has implemented since May to 425 basis points. All but one of the 24 analysts surveyed by Reuters predicted the move.

The central bank lowered its predictions for inflation this year and the following year. It reaffirmed that it was ready to take action if necessary to reduce the rate of consumer price increases to within its comfortable 2%-4% range.

The central bank now anticipates inflation to average 6.0% in 2023 and 2.9% in 2024, down from its prior predictions of 6.1% and 3.1% after annual inflation slightly dropped to 8.6% in February.

.embed_code iframe {
height: 325px !important
}
.embed_code p { margin-top: 18%; text-align: center;
}
.embed_code { height: 370px; width: 80%; margin: auto;
}
.embed_code h2{ font-size: 22px;
}

BONUS VIDEO: Weekly news summary from the markets

[embedded content]

spot_img

Latest Intelligence

spot_img