MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) again hiked interest rates in a continued attempt to control high inflation.

In a rate-setting meeting on Thursday, February 16, the BSP’s Monetary Board raised its key policy rate by 50 basis points (bps), bringing it to 6%.

The increase will take effect on Friday, February 17, and will push up the central bank’s interest rates on the overnight deposit and lending facilities to 5.5% and 6.5%, respectively. (READ: How interest rate hikes impact your money and the economy)

The BSP’s move comes after inflation in January showed no signs of slowing down, defying expectations that it was already easing. In December 2022, Finance Secretary Benjamin Diokno had said that inflation already “peaked” at 8.1%, but it surged to 8.7% the following month.

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With that in mind, the BSP also raised its inflation forecast for 2023, bumping it up to an average rate of 6.1%. This is significantly higher than the central bank’s previous projection of 4.5%, which it made during its December 2022 policy meeting.

The BSP has been aggressive in matching the big hikes made by the US Federal Reserve – and the central bank hinted that it may not be done raising rates.

“Given these considerations, the Monetary Board deems a strong follow-through monetary policy response as necessary to reduce the risk of a breach in the inflation target in 2024. An upward adjustment in the policy interest rate would also prevent inflation expectations from drifting further away from the target band,” the BSP said in a statement on Thursday.

The BSP maintained that it will take “all necessary policy actions” to rein in inflation into the target band of 2% to 4%. It also called for an aggressive “whole-of-government” approach to relieve supply-side pressures, which have driven up food prices in recent months.

The next rate-setting meeting of the Monetary Board will take place in March. – Rappler.com