Philippines raises rate for first time since 2018

Philippines raises rate for first time since 2018

A man sleeps under a backhoe along the streets of Divisoria, a local shopping district in Manila, on Tuesday. (Photo: AFP)
A man sleeps under a backhoe along the streets of Divisoria, a local shopping district in Manila, on Tuesday. (Photo: AFP)

The Philippine central bank raised its key interest rate for the first time since 2018 to combat Southeast Asia’s second-fastest inflation.

Bangko Sentral ng Pilipinas increased the benchmark rate by 25 basis points to 2.25%, it said in a statement on Thursday, as forecast by 14 of 21 economists in a Bloomberg survey. The rest forecast no change.

The hike makes Philippines the latest in Asia to tighten policy settings after India and Malaysia unexpectedly raised borrowing costs this month to battle price pressures. Faster inflation fanned by the war in Europe and supply disruptions from virus lockdowns in China risk denting consumption demand, and in turn the global economic recovery from the pandemic.

Consumer prices are currently at 4.9% -- the second-fastest rate in Southeast Asia and well above the central bank’s 2% to 4% target band.


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