The Bangko Sentral ng Pilipinas (BSP) is likely to launch another big-time increase in interest rates soon as high inflation continues to persist and the peso tumbles to record lows.
BSP Governor Felipe Medalla made the statement in a Bloomberg interview on Friday, October 14. “It’s a question of whether it is 50 or 75 basis points,” he said.
Medalla, however, clarified why the Philippines will only roll out up to a 75 basis-point hike when the United States did a full percentage point increase last month.
“The argument for not responding point-by-point is that our inflation rate is lower, but the argument for doing something bolder is that the question of the currency also has to be addressed,” Medalla said.
“What’s on the table is a combination of using reserves, raising rates, and of course, if possible some form of international cooperation,” he added, admitting that the Fed’s moves have a very significant effect on emerging markets like the Philippines.