BSP may respond point by point to Fed’s next hike

  • The Bangko Sentral ng Pilipinas (BSP) may have to respond to the US Federal Reserve point by point as the rate differential has become too narrow.
  • “If I’m the only one voting, I will match the next Fed increase. The interest rate differential has become too narrow,” BSP Governor Felipe M. Medalla said at a forum hosted by the Bankers Association of the Philippines.
  • “Given our inflation level, given what is happening to the exchange rate, we, in this case, must respond to the Fed point by point,” he added.
  • The BSP governor said the Monetary Board is likely to deliver another 75-basis-point (bp) hike at its next rate-setting meeting on 17 Nov 22. This as the US Federal Reserve is expected to deliver its fourth 75-bp rate hike at its next policy meeting on 1-2 Nov 22.
  • “If they do 75 (bps), we do 75. If they do 50, we do 50. If they do 100, we do 100,” Mr. Medalla added.
  • The BSP has so far raised the key policy rate by 225 bps to 4.25% in 2022 to tame inflation and slowdown the PHP’s decline. “I personally believe we must be a little bit more aggressive in increasing rates also because I think the economy can withstand it,” the BSP chief said.

External Link :