‘BSP rate hike to make inflation predictable’

AKEY official of the Bangko Sentral ng Pilipinas (BSP) defended the BSP Monetary Board’s off-cycle rate hike last week as a key move to bring inflation within government target by next year.

In a televised interview last Monday, BSP Strategic Communication and Advocacy Managing Director Antonio Joselito g. Lambino said they project the 75 basis points (bps) interest rate increase will help bring inflation to a “predictable and low” level.

The latest interest adjustment happened before the scheduled policy meeting of the BSP Monetary Board on August 18, 2022.

“[The] BSP did this because of the price pressures we are now experiencing,” Lambino said. “What we want is to get back to our target inflation. Hopefully, by next year we can get back to two to four percent [inflation] which is an indication of a strong economy.”

But he noted that the interest adjustments should be coupled with the necessary fiscal policy and “nonmonetary interventions” from the national government to keep inflation rate in check.

With the “balanced” government response to inflation, Lambino reiterated the position of the Department of Finance (DOF) that the country will still be able to achieve its gross domestic product (GDP) growth target of 6.5 percent to 7.5 percent despite the high inflation and rate hike.

Prior to the latest interest adjustments this month, the BSP already implemented 25 bps hikes each for May and June.

When asked if the BSP will make another off-cycle rate hike before its next policy meeting, Lambino said to have confidence in the country’s monetary authorities.

“Whatever will be the decision of the Monetary Board, [BSP governor Felipe M.] Medalla [has assured] that it will be data-driven and evidence driven,” Lambino said.