Philippines raises key rates again to fight inflation

Philippines raises key rates again to fight inflation

MANILA,. The Philippines today raised key interest rates for the fourth time this year as it aims to tame inflation that has spiked to a nine-year high and shore up its tumbling currency.

The Bangko Sentral ng Pilipinas again pumped the brakes, this time with a 50 basis point hike to 4.5 per cent, as worries grow the nation’s economy is overheating.

Consumer prices rose by a nine-year high to 6.4 per cent in August, with some analysts warning the September data, due out next week, could top 7 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, 2018’s most powerful storm, is expected to further push up prices because of widespread damage to key agricultural areas.

Rising prices, along with shortages in the supply of rice, the country’s staple cereal, have been become a political liability for President Rodrigo Duterte.

The increases have hit hardest among the poor, who make up nearly a quarter of the nation’s 105 million people.

The central bank — which has raised its key 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, hitting 54.12 pesos to the US dollar late today.

Central bank officials have urged the Duterte government to undertake timely measures to tackle inflation, including the need to lift import quotas on rice to help solve the supply shortage.

Duterte spokesman Harry Roque said the government is 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,” Roque told reporters today. — AFP