The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas , raised the overnight borrowing rate by 25 basis points to 6.5 percent in an off-cycle move to rein in inflation, Governor Eli Remolona Jr. said Thursday.
Remolona said he was no longer expecting inflation to return to the target range of 2 percent to 4 percent this year. He said GDP growth in the third quarter might settle around 4.5 percent which, could represent “some recovery from the second quarter .” The latest baseline projections point to an elevated inflation path over the policy horizon as upside risks continue to manifest.
“The balance of risks to the inflation outlook still leans significantly toward the upside, due mainly to the potential impact of higher transport charges, electricity rates, international oil prices, and minimum wage adjustments in areas outside the National Capital Region,” the BSP said. The Monetary Board said it continues to support fiscal efforts to sustain growth through more rapid programmed spending, as well as non-monetary interventions to address persistent supply-side pressures on prices.