Bank of the Philippines raises interest rates by 0.25% to 2.50%

The Philippine central bank (BSP) raised its key interest rate by 0.25% to 2.50% at its June 23 meeting, the second consecutive increase amid a sharp rise in inflation and a weak peso.

The Philippine central bank has accelerated rate hikes as inflation in the Philippines reaches its highest level in more than three years. Many Southeast Asian central banks have not accelerated rate hikes like other central banks around the world.

In particular, the U.S. Federal Reserve (Fed) has accelerated the pace of interest rate increases to higher levels. And some central banks in Southeast Asia want to focus on recovering their economies after the impact of COVID-19.

Felipe Medalla, who will take over as Philippine central bank governor on July 1, has announced a 0.25% rate hike in August, and it is possible that rates will be raised at that level for the rest of the year. This gradual tightening of monetary policy caused the peso to fall against the dollar this week to its lowest level since 2005.

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