A policy rate hike by 50 basis points (bps) next month may be necessary to prevent inflation expectations from becoming disanchored, according to the Bangko Sentral ng Pilipinas (BSP) Governor Medalla.
This follows after the central bank lifted the key rate to 6 percent.
In an interview with Bloomberg TV, Bankero and BSP Governor Felipe M. Medalla has said that they will likely increase the borrowing rate by 25 bps to 50 bps on March 23.
He also emphasized that when deciding on monetary policy actions, it is easier to correct a large increase than to hike rates too little, too late.
Medalla also commented that the central bank’s primary concern is high inflation.
Meanwhile, the governor said that their main challenge at the moment is controlling second-round pressures coming from the demand side, such as prices of rentals and restaurants, as well as looming wage and transport fare increases.
Another 50 bps rate increase will take the reverse repurchase (RRP) or overnight borrowing rate to 6.5 percent by March 23.
