BSP to hike rates pre-midyear.

The Bangko Sentral ng Pilipinas (BSP) is set to hike interest rates before the midyear, according to recent reports. This move is aimed at curbing inflation and stabilizing the economy amidst the ongoing COVID-19 pandemic.

The BSP has been closely monitoring inflation rates, which have been steadily rising over the past few months. In March, inflation hit a two-year high of 4.5%, exceeding the BSP’s target range of 2-4%. This was largely due to higher food and fuel prices, as well as supply chain disruptions caused by the pandemic.

To address this issue, the BSP is expected to raise its key policy rate by at least 25 basis points in the coming months. This would be the first rate hike since 2018, when the BSP raised rates by a total of 175 basis points to combat rising inflation.

While a rate hike may lead to higher borrowing costs for consumers and businesses, it is seen as a necessary step to prevent inflation from spiraling out of control. It would also signal the BSP’s commitment to maintaining price stability and supporting sustainable economic growth.

However, the BSP will need to balance its inflation-fighting mandate with the need to support the economy, which is still reeling from the impact of the pandemic. The BSP has already implemented a range of measures to support the financial system and provide liquidity to businesses and households.

In addition to a rate hike, the BSP may also consider other policy tools such as reserve requirement adjustments and open market operations to manage liquidity and inflation expectations.

Overall, the BSP’s decision to hike rates pre-midyear reflects its proactive approach to managing the economy amidst a challenging environment. While there may be short-term pain for some, the long-term benefits of a stable and sustainable economy will be worth it.