Philippine Central Bank Raises Benchmark Rate

The Philippine central bank raised key interest rates by a quarter percentage point Thursday for the second time in six weeks to stifle inflation.

The bank’s Monetary Board raised the rate it charges commercial banks for overnight borrowing to 6.0 percent and the rate it pays lenders for overnight deposits to 4 percent.

Deputy Governor Diwa Guinigundo said the decision was made because forecasts put next year’s inflation rate at 3.8 percent, close to the upper end of the bank’s 2-4 percent target range. The bank forecasts an inflation rate of 4.5 percent this year.

Possible increases in food prices due to tight domestic supply, a pending petition for utility rate increases and potential power shortages could push inflation higher, he added.

Guinigundo also said the rate increase is a “pre-emptive move” in the context of the U.S. looking like it will tighten its currently loose monetary policy.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza