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BSP Raises Policy Rate By 50bps, Main Concern is Bringing Inflation Back Down

PHILIPPINES
  • The BSP decided to hike its policy rate by 50bps to 3.75% (as expected) this morning, its highest level since February 2020, to continue to ease inflationary pressures.
  • BSP Governor Medalla mentioned that the central bank is ready to take more actions to steer CPI to target; Medalla made it clear that the main concern is bringing inflation back down.
  • CPI inflation has been accelerating in the past few months, currently standing at 6.4%, which is far above the 2%-4% target range.
  • Inflation forecasts were revised lower for 2023 and 2024, down to 4% and 3.2%, respectively (vs. 4.2% and 3.3% in June).
  • However, the 90% confidence interval projection band for 2023 is listed as between 2.5% and 5.6%, implying the variance is quite elevated
  • *MEDALLA: PHILIPPINE INFLATION WILL PROBABLY PEAK IN OCT OR NOV (bbg).
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