Philippine central bank raises rate to 5.5% — Channel NewsAsia

The Central Bank of the Philippines raised its key interest rate by 50 basis points to 5.50% on October 22. This was the fourth consecutive increase, and its size exceeded market expectations.

Decision exceeded forecasts

All 27 economists surveyed by Reuters expected Bangko Sentral ng Pilipinas to raise the rate by only 25 basis points. Since April, the total monetary policy tightening has amounted to 100 basis points, Channel NewsAsia reports.

The regulator said the decision would make it possible to keep monetary policy at an appropriately tight level. The central bank also said it was ready to take further monetary measures if necessary.

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Inflation and the peso exchange rate

Annual inflation in the Philippines accelerated to 7.2% in September from 6.1% in August. The increase was linked to higher prices for rice, electricity, fuel and transportation. The country’s economy grew by 2.3% year-on-year in the second quarter, the weakest pace since 2021; the figure was affected by a decline in construction and weaker domestic demand.

After the decision was announced, the Philippine peso strengthened to 63.311 per US dollar. The central bank’s next monetary policy meeting is scheduled for December 17.