Philippine Central Bank Delivers Surprise 50-Basis-Point Hike to 5.50% as Inflation Hits 7.2% and Peso Falls to Record Low
MANILA — The Bangko Sentral ng Pilipinas (BSP) raised its benchmark overnight reverse repurchase rate by 50 basis points to 5.50 percent on October 22, lifting its overnight deposit and lending rates by 50 basis points each, to 5.00 percent and 6.00 percent. It is the fourth consecutive tightening since April, bringing total increases since then to 125 basis points, and the first 50-basis-point move since February 2023. The move was bigger than the market expected: 20 of 22 analysts polled by BusinessWorld forecast a quarter-point increase and only two called the half-point move, while all 11 economists surveyed by The Wall Street Journal expected a 25-basis-point hike.
Resurgent inflation and a weakening peso drove the decisive move. Headline inflation returned to 7.2 percent in September from 6.1 percent in August, the seventh straight month above the BSP's 2 to 4 percent target; core inflation climbed to 4.7 percent, nearly a three-year high. The peso closed at a record low of 63.361 to the dollar on October 21. In its statement, the central bank said the Monetary Board saw a need for a strong policy response to broadening price pressures and further upside risks, and that such a decisive response would make monetary policy appropriately restrictive and help anchor inflation expectations. The bank warned inflation would accelerate further in the coming months, remain elevated in 2027, and approach its 3 percent target only in 2028.
Growth is slowing at the same time: gross domestic product expanded 2.3 percent in the April-to-June quarter, its fourth consecutive quarterly slowdown and a post-pandemic low, with first-half growth of 2.6 percent against the government's full-year target of 3.5 to 4.5 percent. Renewed tensions in the Middle East have pushed up oil prices and transport fares, while El Niño conditions threaten farm output, adding to upside risks. The Monetary Board's next meeting is on December 17; BPI lead economist Emilio Neri Jr. expects another 25-basis-point increase at that meeting, which would take the policy rate to 5.75 percent by year-end, according to reports.
(GSM, from the BSP statement via BusinessWorld, The Wall Street Journal and TradingView)
Source: GSM · USA (original Chinese edition)
Photo: 图：菲律宾央行布图安分行大楼，资料图。照片：FSUUpedia Restore Division，CC BY-SA 3.0，经Wikimedia Commons。 / The Bangko Sentral ng Pilipinas Butuan branch building (file photo). Photo: FSUUpedia Restore Division, CC BY-SA 3.0, via Wikimedia Commons.
