Philippine Central Bank Wants To Take Further Actions To Control Surging Inflation
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The Philippine central bank has announced plans to tackle inflation using all the monetary policy actions required. This comes after data showed that the inflation rate has hit its fastest pace in almost 14 years.
Inflation Rate Driven By Price Increase In Major Commodity
The consumer price index surged 7.7% in October from the same month last year. It has been reported as the fastest rate since December 2008. The inflation rate is driven by price increases in major commodity items such as non-alcoholic beverages and food.
The inflation figure was also slightly higher than the central bank rate of 7.1% to 7.9% forecast for the month. Inflation from January to October averaged 5.4%, which is way higher than the central bank’s full-year target range of 2% to 4%. Core inflation, which indicates a broadening price pressure, reached 5.9% last month from an upwardly revised 5.0% in September, according to the Philippine Statistics Authority.
The statistics see a high probability of a higher level of inflation in November, partly because of the impact of a recent destructive storm.
The Philippine central bank noted that the inflation risks outlook appears to be tilting to the upside for 2022/2023, but seemed to be broadly balanced for 2024.
The Central Bank To Raise Interest Rates By 75 Bps
The bank has already raised interest rates five times this year to 4.25%, adding a total of 225 basis points in the process. It noted that it is ready to take all monetary policy actions that will be required to bring inflation back to the level the government has projected for the year. This means investors will be expecting an additional increase in interest rates before the end of the year.
On Thursday, the central bank governor, Felipe Medalla, stated that the institution will be hiking interest rates by 75 basis points at its meeting on November 17. The bank added that the hike will temper any impact on the peso-dollar rate as it will match the latest U.S. Federal Reserve’s tightening.
The peso is the worst-performing currency in Southeast Asia. It has already lost 13% of its value against the U.S. dollar this year.
