Philippine central bank raises policy rate by 25 basis points, as expected

[MANILA] The Philippine central bank raised its key interest rate by 25 basis points to 4.75 per cent on Thursday (Jun 18), it said in a statement.

Twenty of 25 economists in a Reuters poll expected the Bangko Sentral ng Pilipinas to hike its overnight borrowing rate by 25 basis points. Five others projected a 50-basis-point hike to 5 per cent.

“Today’s policy action will help keep inflation expectations anchored and mitigate the risk of second-round effects,” the BSP said in its statement.

The move follows a 25-basis-point increase at the previous meeting in April as the BSP tightened monetary policy to keep a lid on inflation.

The central bank held an off-cycle meeting on March 26 when it decided to hold rates, the first such move by a central bank in Asia in response to the Middle East conflict, reflecting heightened concerns about its impact on inflation and growth.

Annual inflation eased to 6.8 per cent in May from the previous month’s 7.2 per cent, driven mainly by slower increases in food and transport costs. The annual pace of consumer price growth ​remained above the BSP’s 3 per cent goal for a third straight month. REUTERS