BSP hikes benchmark rate to 4.25 percent following Fed adjustment

ABS-CBN News

MANILA (UPDATE) - The Bangko Sentral ng Pilipinas on Thursday raised its policy rate by 50 basis points hours after the US Federal Reserve announced another aggressive rate hike.The BSP&#x27;s move takes the overnight reverse repurchase rate, which is used by banks to benchmark interest rates on loans, to 4.25 percent. So far, the central bank has raised rates by 225 basis points this year, as tries to tame inflation which surged due to high fuel and food prices.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/22/22/us-fed-raises-key-interest-rate-as-recession-fears-mount">US Fed raises key interest rate as recession fears mount</a></li>	<li><a href="https://news.abs-cbn.com/business/09/06/22/inflation-slows-to-63-percent-in-august-psa">Dollar breaks 145 yen after Bank of Japan keeps loose policy</a></li></ul>The BSP&#x27;s latest rate hike followed the 50-bps in August and the <a href="https://news.abs-cbn.com/business/07/14/22/in-surprise-move-bsp-hikes-interest-rate-by-75-basis-points">off-cycle</a> 75-bps adjustment in July as inflation soared in the previous months due to supply constraints and the global energy crisis.Inflation quickened to 6.4 percent in July before slightly cooling to 6.3 percent in August. “The BSP’s latest baseline forecasts show that average inflation is still projected to breach the upper end of the 2-4 percent target range at 5.6 percent in 2022. The forecast for 2023 has also increased slightly to 4.1 percent,” the central bank said. Inflation meanwhile is forecast to ease to 3 percent in 2024.BSP Governor Felipe Medalla earlier said the BSP is ready to use its monetary tools, which means there could be more interest rate hikes, to tame rising prices.But Finance Secretary Benjamin Diokno earlier said inflation could have peaked in July.Raising interest rates could also help in stabilizing the peso, Medalla said. The peso weakened to a new historic low of P58.49 against the dollar on Thursday.Raising interest rates could have an impact on growth but both Medalla and Diokno have said the country&#x27;s economy is robust enough to absorb the impact.Analysts said the central bank still has room for adjustment, pointing out that the Philippine economy has been growing at an average of over 6 percent per year prior to the pandemic or from 2010 to 2019 with its policy rate near or at 4 percent. The economy is still expected to grow between 6.5 percent to 7.5 percent in 2022, according to government estimates. Central banks around the world have been trying to keep pace with the Fed, which has been aggressively hiking US interest rates to control inflation in the world&#x27;s largest economy. Fed Chairman Jerome Powell on Wednesday (Thursday Manila time) announced a third 75 bps rate hike despite worries over a possible recession.<ul class="op-related-articles">	<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>	<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/07/28/22/bsp-rate-hike-unlikely-to-hurt-economy-bpi-economist">BSP rate hike unlikely to hurt economy as recovery underway: BPI economist</a></li></ul><div>FROM THE ARCHIVES: </div><figure class="op-interactive"><iframe __idm_id__="23150593" 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=2123372" 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 Bangko Sentral ng Pilipinas on Thursday raised its policy rate by 50 basis points hours after the US Federal Reserve announced another aggressive rate hike.

BSP hikes benchmark rate to 4.25 percent following Fed adjustment | ABS-CBN

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BSP hikes benchmark rate to 4.25 percent following Fed adjustment

BSP hikes benchmark rate to 4.25 percent following Fed adjustment

ABS-CBN News

Published Sep 22, 2022 03:22 PM PHT

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Updated Sep 22, 2022 07:18 PM PHT

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interest rate

interest rate hike

BSP

Bangko Sentral ng Pilipinas

Felipe Medalla

Benjamin Diokno

inflation

economy

peso

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