The central bank knew it was time to take things up a notch.
The Bangko Sentral ng Pilipinas (BSP) fired off a 50 basis points increase in interest rates on Thursday, Aug. 9, just as inflation surged to a fresh high.
“In deciding to raise the BSP?s policy interest rate anew, the Monetary Board noted that latest baseline forecasts have shifted higher over the policy horizon, indicating some risk of inflation exceeding the target in 2019,” the BSP said in a statement.
“Upside risks also continue to dominate the inflation outlook, as the sustained increase in core inflation suggests broadening price pressures amid resilient aggregate demand conditions.”
Inflation jumped 5.7 percent in July.
“The Monetary Board believed that the series of policy rate adjustments thus far in 2018 will help reduce further the risks to inflation, including those emanating from the ongoing normalization of monetary policy in advanced economies and its impact on the foreign exchange market, and bring inflation toward a target-consistent path over the medium term,” the central bank added.