The Monetary Board in its regular meeting this morning raised the interest rates on BSP's reverse repurchase facility by 75 basis points to 3.25 percent beginning today.
At the morning's regular meeting of the Monetary Board, it decided to raise the interest rate on the Bangko Sentral ng Pilipinas' overnight reverse repurchase facility by 75 basis points to 3.25 percent effective today, July 14.
Though Bangko Sentral ng Pilipinas Governors Felipe Medalla (current) and Benjamin Diokno (past) have always shunned raising interest rates by more than 25 basis points, economists and bankers have been saying maintaining the rates this low would retard the growth of the economy and worsen inflation even more.
Accordingly, the interest rates on the overnight deposit and lending facilities were raised to 2.75 percent and 3.75 percent, respectively.
In raising the policy interest rate anew, the Monetary Board recognized that a significant further tightening of monetary policy was warranted by signs of sustained and broadening price pressures amid the ongoing normalization of monetary policy settings.
The Monetary Board noted that favorable conditions arising from the strong rebound in growth thus far in the year suggest that the domestic economy can accommodate a further tightening of monetary policy settings.
By taking urgent action, the Monetary Board aims to anchor inflation expectations further and temper mounting risks to the inflation outlook. In particular, policy action is intended to help manage spillovers from other countries that could potentially dis-anchor inflation expectations.
At the same time, the Monetary Board continues to urge timely non-monetary government interventions to mitigate the impact of persistent supply-side pressures on commodity prices.
The BSP reassures the public of its unwavering commitment and readiness to take further necessary actions to steer inflation towards a target-consistent path over the medium term in keeping with its price stability mandate.
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