NextGen Day

According to BSP Governor Felipe Medalla, the key interest rates of Bangko Sentral ng Pilipinas (BSP) were increased by 75 basis points on Thursday to manage rising inflationary threats and stabilize inflation expectations.

The choice was taken following the 50 basis point hike announced following the Monetary Board’s fourth rate-setting meeting on June 23 during a regularly scheduled meeting.

As of Thursday, the BSP’s overnight reverse repurchase (RRP), overnight deposit, and overnight repurchase rates are 3.25 percent, 2.75 percent, and 3.75 percent, respectively.

The BSP’s main rates had their first increase of the year in March at a 25 basis point increase, bringing the total increases to date to 150 basis points, which is comparable to the increase in the Federal Funds rates.

By observing “that a significant further tightening of monetary policy was needed by indicators of prolonged and expanding price pressures amid the ongoing normalization of monetary policy settings,” according to Medalla, the Board came to its decision.

He claimed that the economy has made a robust recovery, allowing for further increases in the BSP’s key rates.

“By acting swiftly, the Monetary Board seeks to further anchor inflation expectations and contain growing inflation forecast concerns. Policies are being taken, in particular, to help contain spillovers from other nations that might potentially undermine inflation expectations, the official added.

The Board “continues to recommend timely non-monetary government initiatives to offset the impact of ongoing supply-side pressures on commodity prices,” according to Medalla’s statement.

In keeping with its price stability mandate, he continued, “The BSP assures the public of its unwavering commitment and preparedness to take further required actions to steer inflation towards a target-consistent path over the medium term.”

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