By Kosaku Narioka
The Philippine central bank raised its benchmark interest rate by a quarter of a percentage point, slowing the pace of its rate increases from previous meetings despite stubbornly high inflation, as the turmoil in the global banking sector increases uncertainty over the economic outlook.
The Bangko Sentral ng Pilipinas said Thursday that it would increase its benchmark overnight borrowing rate by 25 basis points to 6.25% and its corresponding lending rate by the same amount to 6.75%, effective Friday.
Seven of the eight economists surveyed by The Wall Street Journal had projected the central bank would raise the policy rates by a quarter percentage point, while one expected a 50-basis-point increase.
While persistently high inflation keeps the central bank biased toward tightening, policymakers may prefer milder rate increases amid the turmoil in the global banking sector, some economists have said. The Philippine central bank raised the policy rates by half a percentage point at its previous two policy meetings.
The country’s consumer-price index in February rose 8.6% from a year earlier, well above the central bank’s inflation target range of 2% to 4%. Its gross domestic product in the fourth quarter increased 7.2% from a year earlier and 2.4% from the previous quarter.
After years of policy stimulus, central banks around the world quickly raised rates to contain surging inflation caused by a recovery from the Covid-19 pandemic and the Russia-Ukraine war.
The Philippine central bank has been raising rates since May, when it increased the rate from 2.00%, its first increase in three-and-a-half years.
The Federal Reserve approved on Wednesday a quarter-percentage-point rate increase but signaled that banking-system turmoil might end its tightening campaign sooner than seemed likely two weeks ago.
Write to Kosaku Narioka at [email protected]
(END) Dow Jones Newswires
03-23-23 0321ET
