The Philippines has raised interest rates for the fourth time this year as it aims to tame surging inflation and shore up its tumbling currency.
The Bangko Sentral ng Pilipinas [central bank] today (Thursday, September 27) announced a 50 basis point hike to 4.5 per cent, as worries grow that the nation’s economy is overheating.
Consumer prices rose by a nine-year high to 6.4 per cent last month, with some analysts warning that September data, due out next week, could breach seven per cent.
“The Monetary Board recognised that a further tightening of monetary policy was warranted by persistent signs of sustained and broadening price pressures,” the bank said.
It added that inflation for this year and next would likely surpass the monetary authority’s own forecasts.
The destruction wrought earlier this month by Typhoon Mangkhut — the world’s most powerful storm this year — is expected to further push up prices due to agricultural crop damage.
Rising prices, along with shortages in the supply of rice have been become a pressing problem for President Duterte.
The increases have hit hardest among the poor, who have traditionally been the president’s strongest supporters.
The central bank —- which has raised its key interest rates by 150 basis points since May — also said the latest rate hike should help reduce further risks to inflation, including exchange rate volatility.
The Philippine peso has been hovering at 13-year lows this month, hitting 54.12 pesos to the dollar today.
Central bank officials have urged the government to undertake “timely measures” to tackle inflation, such as lifting import quotas on rice.
Presidential spokesman Harry Roque said the government was taking steps to address inflation, including lifting controls on imports of previously protected food products.
“Right now the foremost priority of the administration is fighting inflation. So everything is sidelined now,” he told reporters today.
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