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Bangko Sentral hikes benchmark interest rate by 75-bps to match Fed, fight inflation

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MANILA (UPDATE) - The Bangko Sentral ng Pilipinas on Thursday hiked its benchmark interest rate by 75 basis points to 5 percent, as earlier announced. The BSP said this was to match the US Federal Reserve&#x27;s earlier adjustment and to tame inflation. The overnight reverse repurchase rate has been adjusted by a cumulative 300 bps points this year as inflation continues to rise.BSP Gov. Felipe Medalla said he announced the policy adjustment 2 weeks ahead of Thursday&#x27;s meeting to prevent further peso weakening against the US dollar. &quot;Under the current global conditions, the dollar is so strong, then a small difference between the policy rate between the US and the Philippines will prohibit a much lower peso,” Medalla said.&quot;There are times when this is good to give a forward guidance…a certainty of what we’re doing today did not cause too much volatility during that 2 weeks,&quot; he said.Thursday&#x27;s interest rate adjustment is likely to have already been priced in by the market, Sun Life of Canada Philippines Equity Portfolio Manager Rod Christopher Barit said on Thursday.Barit said analysts are now monitoring the December adjustments by the US Fed, which is widely seen to slow down to 50-bps from the successive 75-bps point hike in the previous meetings. &quot;We think this is priced in, this has been communicated well by the BSP earlier this month. It will be more of a surprise if it won’t be 75-basis points. What we’re looking at right now, it’s not the 75-bps today but the December rate hike,&quot; Barit said. &quot;The consensus right now is another 50 bps in December, which is lower than 75 bps,&quot; he added.The BSP also raised its inflation forecast to 5.8 percent in 2022 and 4.3 percent in 2023 before easing back to within the target of 3.1 percent by 2024.&quot;In deciding to raise the policy interest rate anew, the Monetary Board noted that core inflation has risen sharply in October, indicating stronger pass- through of elevated food and energy prices as well as demand-side impulses on inflation,&quot; the BSP said. Inflation hit 7.7 percent in October, its highest in nearly 14 years. The rise in the consumer price index was much faster than the government&#x27;s 2 to 4 percent target range. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/11/04/22/inflation-hits-77-pct-in-oct-highest-in-almost-14-years">Inflation quickens further to 7.7 percent in October, highest in nearly 14 years</a></li>	<li><a href="https://news.abs-cbn.com/business/11/03/22/bsp-says-to-match-us-feds-75-bps-rate-hike-on-nov-17">BSP says to &#x27;match&#x27; US Fed’s interest rate hike in Nov. 17 meeting</a></li></ul><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=2344603" 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 hiked the benchmark interest rate by 75 basis points to 5 percent. 