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BSP says to 'match' US Fed’s interest rate hike in Nov. 17 meeting

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ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="Banko Sentral ng Pilipinas (BSP) Governor Felipe Medalla during the Management Association of the Philippines Economic Briefing and Membership Meeting at the Bonifacio Hall of Shangri-La at The Fort, Taguig City on August 19, 2022. Jonathan Cellona, ABS-CBN News" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/tvpatrol/11/03/20220819-map-membership-meeting-jc-10.jpg"/><figcaption>Banko Sentral ng Pilipinas (BSP) Governor Felipe Medalla during the Management Association of the Philippines Economic Briefing and Membership Meeting at the Bonifacio Hall of Shangri-La at The Fort, Taguig City on August 19, 2022. <em>Jonathan Cellona, ABS-CBN News</em></figcaption></figure></div><p>MANILA — Bangko Sentral ng Pilipinas Governor Felipe Medalla on Thursday said the monetary board plans to increase the country’s key policy rate by 75 basis points to match the recent announcement made by the US Federal Reserve.</p><p>The move will keep the interest rate differential between the 2 countries at the level before the recent Fed hike adjustment on Nov. 2 to support the Philippine peso.</p><p>The US Federal Reserve on late Wednesday announced another 75-bps rate hike to cool down inflation. This is the 4th increase of this magnitude this year. </p><p>&quot;As expected, the Fed increased its policy rate this morning (Manila Time) by 75 bps. This supports the BSP’s stance to hike its policy rate by the same amount in its next policy meeting on Nov. 17,&quot; BSP Gov. Felipe Medalla said in a statement.</p><p>&quot;The BSP deems it necessary to maintain the interest rate differential prevailing before the most recent Fed rate hike, in line with its price stability mandate and the need to temper any impact on the country’s exchange rate of the most recent Fed rate hike,&quot; he added.</p><p>Medalla clarified that although he made the statement, it is not an off-cycle hike since it would only be effective on Nov. 17.</p><p>So far, the monetary board has raised the country&#x27;s overnight borrowing rate to 4.25 percent to reign in inflation. Medalla said the recent hikes also help in stabilizing the peso.</p><p>Inflation is expected to settle between 7.1 to 7.9 percent in October, way beyond the government&#x27;s 2 to 4 percent target range.</p><p>Analysts have said that the Philippine peso could take a hit if the BSP does nothing to reduce the interest rate differential between the 2 countries. </p><p>&quot;By matching the Fed’s rate hike, the BSP reiterates its strong commitment to its mandate of maintaining price stability by aggressively dealing with inflationary pressures stemming from local and global factors,&quot; Medalla said.</p><p>The peso dipped to as low as P59 to the dollar and has regained some stability in recent weeks, firming to around P57 to P58 to $1. It opened at P58.4 to $1 on Thursday following the US Fed hike.</p><p>BSP&#x27;s monetary-policy setting meeting will be held on Nov. 17, a few weeks behind the US Fed&#x27;s announcement.</p><div><strong>— With reports from Agence France Presse, Warren De Guzman and Jessica Fenol, ABS-CBN News</strong></div><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/10/03/22/peso-sinks-to-new-record-low-of-p59-to-1">Peso sinks to new record low, closes at P59 to $1 on Oct. 3</a></li>	<li><a href="https://news.abs-cbn.com/video/business/10/03/22/another-off-cycle-rate-hike-possible-for-bsp-analyst">Another off-cycle rate hike possible for BSP as Fed signals increase, analyst says</a></li>	<li><a href="https://news.abs-cbn.com/business/08/05/22/medalla-interest-rate-hikes-stabilizing-peso">BSP Gov. Medalla says rate hikes &#x27;working&#x27; in stabilizing peso</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=2268817" 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 said it is likely to increase the country’s key policy rate by 75 basis points.