The Bangko Sentral ng Pilipinas (BSP) raised its benchmark interest rate by 25 basis points to 4.75% on Thursday, in line with market expectations, as policymakers sought to keep inflation under control.
Twenty of 25 economists surveyed by Reuters had expected the overnight borrowing rate to be increased by 25 basis points, while the remaining five had forecast a larger 50-basis-point move to 5%.
In a statement, the central bank said, “Today’s policy action will help keep inflation expectations anchored and mitigate the risk of second-round effects.”
The move follows another 25-basis-point increase in April as the BSP continued tightening monetary policy to contain price pressures.
The central bank had also held an off-cycle meeting in March, opting to leave rates unchanged. The decision marked the first emergency-style response by an Asian central bank to the conflict in the Middle East amid concerns over its implications for inflation and economic growth.
Annual inflation eased to 6.8% in May from 7.2% in April, supported by slower increases in food and transport costs. However, consumer price growth remained above the BSP’s 3% target for the third consecutive month.
The latest increase extends the BSP’s efforts to anchor inflation expectations despite signs that price pressures have begun to moderate.
Reuters
