Philippine central bank hikes key rate by 25bps to 4.75% to cap inflation

16, Nov. 2018

MANILA, NNA – The Philippine central bank on Thursday tightened credit for the fifth straight time, hiking its benchmark interest rate by 25 basis points to 4.75 percent, in a continued effort to check inflation.

The monetary board’s decision, effective Friday, pushed the key rate to the highest level in more than nine years, following a 50-bps rate hike in September.

The bank has raised rates by a total of 175 basis points (1.75 percentage points) since May.

Bangko Sentral ng Pilipinas said on Twitter that its policymakers “deemed it necessary to respond with proactive policy action to help temper the risks to the inflation outlook including those emanating from continued uncertainty in the external environment.”

Annual consumer inflation rose an average 5.1 percent in the first 10 months of 2018, well above the central bank's target range of 2 to 4 percent.

Given the upside risks to the inflation outlook, and inflation expectations have remained elevated as supply-side, possible wage pressures continue to drive price development, the banks said.