The Philippines: BSP may consider bigger rate hikes

• THE Philippine central bank would consider bigger key rate increases to support the peso and amid faster inflation, according to its new chief.
• “If we see that the exchange rate is overshooting too much, and that selling foreign exchange will not make the problem go away, we would clearly consider may be increasing policy rates by more than our planned 25 basis points,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said.
• Medalla clarified that aggressive hikes by the BSP will depend on the exchange rate “overshooting” and stoking imported inflation. As it stands, there was no need for the Southeast Asian nation to otherwise match the Fed’s hikes like-for-like, he said.
• “The key really is what’s the momentum of inflation,” Medalla told reporters. Still, he expects consumer spending to boost economic growth in 2Q22, citing the influx of people at malls.
• “People are actually almost unafraid of COVID,” he said. “To the extent the rising cases do not result in clogging the hospitals, then we’ll be fine.”
• Inflation likely quickened to 5.7-6.5% in Jun 22 amid spiraling oil and food prices, higher electricity rates and a weaker peso, his predecessor Benjamin E. Diokno said.
• “The BSP will continue to monitor closely emerging price developments to enable timely intervention to arrest the emergence of further second-round effects, consistent with its mandate of price and financial stability,” he added.
• Manila Electric Co. (Meralco), which distributes power to the capital region, raised its overall rate by PHP0.3982 a kilowatt-hour (kWh) to PHP10.4612 a kWh in Jun 22 from PHP10.0630 a kWh in May 22.

External Link : https://www.bworldonline.com/top-stories/2022/07/01/458694/bsp-may-consider-bigger-rate-hikes/

External Link : https://www.bloomberg.com/news/articles/2022-06-29/philippines-open-to-jumbo-hikes-to-aid-peso-new-bsp-chief-says