SunStar Publishing Inc.
THE Bangko Sentral ng Pilipinas decided to raise its policy rate by 25 bps to 6.50% during its Monetary Board meeting on Thursday. Likewise, the overnight deposit and lending facility rates were raised by the same magnitude.Inflation in recent months has been driven mostly by supply side factors, especially constraints in the agriculture sector.This being the case, supply side measures are the most appropriate solution to this problem.
1% might trigger another rate hike in that meeting. Aside from this, the central bank may also consider a rate hike if the exchange rate breaches the 57 level and moves closer to 58.The economy has shown signs of strength and resilience despite the increase in interest rates. It should be noted that government underspending was the main reason why the economy slowed down in the 2nd quarter. It shaved off 1.3% from the 2nd quarter GDP growth, BPI said.The economy would have grown by 5.
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