KONTAN.CO.ID - MANILA. The Philippine central bank raised interest rates for the first time since 2018 on Thursday, joining peers around world in a rush to stem intensifying inflationary pressures that could derail the domestic economy's recovery. The central bank also said the strong rebound in domestic economic activity and labour market conditions during the first quarter "provides scope for (the central bank) to continue rolling back its pandemic-induced interventions", signalling further tightening could be expected. The Bangko Sentral ng Pilipinas (BSP) lifted the overnight reverse repurchase facility rate by 25 basis points to 2.25%, as expected by the majority of 17 economists in a May 12-16 Reuters poll.
The rates on the overnight deposit and lending facilities were likewise raised by 25 bps to 1.75% and 2.75%, respectively. Read Also: ECB to Force UK-Based Investment Banks to Relocate Staff and Trading Activity The BSP slashed interest rates by a cumulative 200 basis points in 2020 to help revive an economy that had plunged into recession due to the COVID-19 pandemic. "Persistent inflationary pressures point to the need for prompt monetary action to anchor inflation expectations," BSP Governor Benjamin Diokno said. The BSP revised its 2022 average inflation forecast to 4.6%, from 4.3% previously, above the 2%-4% target band. For 2023, inflation is seen closer to the upper end of the same target range at 3.9%.