Economy · August 6, 2022

Medalla suggests a 50 bps excursion

FOLLOWING last month’s main inflation rate, which hit a new three-year high of 6.4%, Governor Felipe Medalla hinted on Friday that Bangkok Sentral ng Pilipinas (BSP) could raise rates once again. interest aggressively.

He announced at a forum organized by the Federation of Philippine Chinese Chambers of Commerce and Industry that the most recent inflation reading “clearly increases the likelihood” of a central bank rate hike by 50 basis points (bps) “instead of 25. [bps]. “

Medalla, however, said that if external development were to improve suddenly, he cannot rule out the possibility of a significantly lower rate hike of 25bps.

“For example, if tomorrow’s news says OPEC oil prices have risen to $ 80 [per barrel], of course, this is wishful thinking. it [rate hike] goes towards 25 instead of 50 [bps]”He explained.

OPEC is the Organization of Petroleum Exporting Countries.

Get the latest news


delivered to your inbox

Sign up for the Manila Times daily newsletter

By registering with an email address, I declare that I have read and accept the Terms of Service and the Privacy Policy.

Philippine monetary authorities estimate the average price of crude oil to be around $ 106.30 per barrel this year, $ 95.30 per barrel in 2023 and $ 84.10 per barrel in 2024. These are higher than previously. batch of forecasts, which set prices for 2022 and 2023 at $ 100.04 and $ 89.50, respectively, per barrel.

High oil prices are one reason the BSP announced a 17bp off-cycle rate hike on July 15 after two consecutive 25bp hikes in May and June, along with the peso’s depreciation and others. external factors.

Central bank lending, deposit and overnight lending rates currently stand at 3.25%, 2.75% and 3.75%, respectively.

Medalla expressed confidence in the economy’s ability to sustain the tight monetary policy Bangkok Sentral applied to reduce inflation.

Its monetary decision-making committee expects it to reach an average of 5%, up from 4.6% previously and exceeds the 2-4% target.