Philippine central bank likely to hike interest rates further in remainder of 2018

Philippine central bank Deputy Governor Diwa Guinigundo stated yesterday that the BSP will not hesitate to hike the interest rates further if needed to rein in prices and underpin the Philippine peso. Guinigundo added that the central bank’s main mandate is price stability and “we intend to do just that. If the peso depreciation will impinge on our ability to maintain the stability of prices, we will not hesitate to sustain our vigilance and continue to tighten monetary policy”.

So far in 2018, the Philippine central bank has already raised the interest rates by 150 basis points to 4.5 percent. According to a Commerzbank research report, the central bank might hike its rate again by 50 basis points for the remainder of the year.

Meanwhile, there are hopes that the expected seasonally large remittance flows in the fourth quarter might help stabilize in the Philippine peso. The peso has depreciated almost 8 percent against the USD year-to-date, more than the average depreciation of 5.5 percent for Asian currencies.