Logo of Phnom Penh Post newspaper Phnom Penh Post - Philippines boosts rates despite economic slowdown

Philippines boosts rates despite economic slowdown

Content image - Phnom Penh Post
A vendor holds a calculator as he computes his earnings from selling clothing items at a market in Manila on Thursday. TED ALJIBE/afp

Philippines boosts rates despite economic slowdown

The Philippine central bank hiked its key interest rates by a decade-high 50 basis points on Thursday as it moved to curb inflation, while downplaying the impact its action would have on slowing economic growth.

The monetary authority acted hours after the government announced a 6.0 per cent growth in the second quarter, a sharp slowing that ended a run of 10 consecutive quarters in which the economy grew at least 6.5 per cent.

It blamed the lower-than-expected figures on policy decisions, including the shutdown of holiday island Boracay, which pumps roughly $1 billion into the nation’s economy per year.

But with prices increasing at a five-year high of 5.7 per cent in July, central bank governor Nestor Espenilla said inflation was the priority, while stressing the gross domestic product growth rate was “pretty decent” and economic expansion was not at risk.

“Favourable conditions arising from sustained domestic growth also suggest that the economy can accommodate a further tightening of monetary policy settings,” Espenilla said.

The central bank on Thursday raised its inflation forecasts to 4.9 per cent this year and 3.7 per cent in 2019, up from 4.5 per cent and 3.3 per cent respectively.

Following two 25-percentage-point rate rises earlier this year, Thursday’s increase was the largest made by the Philippine central bank since July 2008, when it effected the same increase to combat double-digit inflation.

The monetary authority’s overnight repurchase facility rose to 4.0 effective Friday, while interest rates on overnight lending and deposit facilities were also raised.

The move followed similarly aggressive steps taken by central banks in developing countries to curb the fallout from rising US interest rates and a stronger dollar.

Earlier on Thursday Manila announced slower economic growth in the second quarter, which fell well short of expectations. Forecasts in a Bloomberg News survey put growth at 6.6 per cent.

MOST VIEWED

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Ministry mulls ASEAN+3 travel bubble

    The Ministry of Tourism plans to launch a travel bubble allowing transit between Cambodia and 12 other regional countries in a bid to resuscitate the tourism sector amid crushing impact of the ongoing spread of Covid-19, Ministry of Tourism spokesman Top Sopheak told The Post on

  • Kingdom accepts Chinese vaccine, PM first to get jab

    Prime Minister Hun Sen said China would offer Cambodia an immediate donation of one million doses of the Covid-19 vaccine produced by the Sinopharm company. In an audio message addressing the public on the night of January 15, he said Cambodia has accepted the offer and

  • Reeling in Cambodia’s real estate sector

    A new norm sets the scene but risks continue to play out in the background A cold wind sweeps through the streets of Boeung Trabek on an early January morning as buyers and traders engage in commerce under bright blue skies. From a distance, the

  • PM asks India for vaccine help

    Prime Minister Hun Sen is seeking assistance from India for the provision of Covid-19 vaccines as the country has produced its own vaccine which is scheduled to be rolled out to more than 300 million Indians this year. The request was made during his meeting with

  • One million Chinese Covid-19 jabs to start rolling in from February

    The government has confirmed that Covid-19 vaccines from China are set to begin arriving in Cambodia by February. This came as the Ministry of Health recorded two imported cases of Covid-19 on January 18. While calling on people to remain vigilant against the pandemic, ministry spokeswoman