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Medalla says policy rate still supportive of economic growth; signals new hike in August

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Jessica Fenol, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="Bangko Sentral ng Pilipinas Governor Felipe Medalla. BSP/File" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/news/07/26/20220526-felipe-medalla-bsp-1.jpg"/><figcaption>Bangko Sentral ng Pilipinas Governor Felipe Medalla. <em>BSP/File</em></figcaption></figure></div><p>MANILA — The Philippines&#x27; robust economy can absorb the recent surprise increase in the benchmark interest rate, Bangko Sentral ng Pilipinas Governor Felipe Medalla said Tuesday.</p><p>The central bank in July implemented an off-cycle 75-basis points interest rate hike which brought the key policy rate to 3.25 percent. The adjustment was made to tame <a href="https://news.abs-cbn.com/business/07/05/22/inflation-rises-again-hits-61-percent-in-june">rising inflation</a> caused by food supply and external effects stemming from Russia&#x27;s invasion of Ukraine. </p><p>&quot;When you look at it, our monetary policy is still very supportive of economic growth… By large, our estimate [is] the economy can absorb the increase in policy rate,&quot; Medalla said during the Marcos administration&#x27;s first post-State of the Nation Address briefing. </p><p>Despite the higher interest rate, the 6.5 to 8 percent growth trajectory from 2023 to 2028 is &quot;still quite attainable,&quot; Medalla said.</p><p>Finance Secretary Benjamin Diokno earlier said the country&#x27;s economy has been growing at an average of 6 percent even when interest rate was as high as 4 percent. </p><div><strong>MORE HIKES?</strong></div><p>When asked about the possibility of more rate hikes for the rest of the year, Medalla assured the public that an off-cycle adjustment was off the table.</p><p>&quot;You can surprise people only once. So there’s no more off-cycle. As to how many rate hikes until the end of the year, it would be very data dependent,&quot; he said.</p><p>But for the August monetary policy-setting meeting, Medalla said the public could rule out 0 and 75-bps hikes. </p><p>&quot;In August, if you’re to bet on 4 numbers, 0, 25, 50 and 75 (bps), you can rule out the lowest and the highest,&quot; he said. </p><p>He said the country could be raising rates until the US Federal Reserve continues its aggressive hiking stance. </p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/07/19/22/another-100-bps-rate-hike-unlikely-to-hurt-economy-analyst">Another 100-bps rate hike by the BSP unlikely to hurt economy: analyst</a></li>	<li><a href="https://news.abs-cbn.com/business/07/14/22/robust-ph-econ-to-absorb-75-bps-hike-finance-chief">Philippines&#x27; &#x27;robust&#x27; economy can absorb 75-bps rate hike: Finance chief</a></li></ul><div><strong>RELATED VIDEO:</strong></div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2140346" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div>

The robust Philippine economy can absorb the recent surprise increase in the benchmark interest rate, BSP Governor Felipe Medalla said.

Medalla says policy rate still supportive of economic growth; signals new hike in August

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Medalla says policy rate still supportive of economic growth; signals new hike in August

Jessica Fenol,

ABS-CBN News

Published July 26, 2022 11:02 AM PHT

Read More:

interest rate

interest rate hike

Felipe Medalla

off-cycle

monetary policy meeting

economy

economic growth

inflation

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