The Philippines central bank on Thursday raised interest rates by 25bps to 2.25%, marking its first hike since 2018 as inflation continues to rise.
The Bangko Sentral ng Pilipinas (BSP) decided to raise interest rate after inflation in April came in at 4.9%, which was well above the full-year target of 2-4%. Inflation’s running average is 3.7%, which is still within target but already closing in to the cap. Inflation rose to 4.0% in March from February’s 3.0%.
BSP Governor Benjamin Diokno earlier hinted that the central bank could take an aggressive step to slow down inflation, saying that the space for maintaining their accommodative stance has considerably narrowed.
The Philippines reported an outstanding economic growth for the first quarter of 2022 at 8.3%, beating market expectations, mainly driven by private consumption. The economy showed outstanding growth compared to a contraction of 3.9% in 1Q21 and a 7.7% growth in 4Q21.