MANILA: The Philippine central bank hiked its key interest rate to 4.50% on Thursday to keep a lid on inflation, driven by rising fuel costs caused by disruptions in the Middle East.
In an April 15-20 poll, 14 out of 26 economists expected no change in the overnight borrowing rate, while a strong minority of 12 predicted a 25-basis-point increase.
The Bangko Sentral ng Pilipinas held an off-cycle meeting on March 26, becoming the first central bank in Asia to do so, reflecting heightened concerns about the impact of the Middle East conflict on inflation and economic growth.
At that meeting, the central bank left policy rates steady, warning that tighter policy could "delay the recovery" of an economy projected to grow 4.4% this year, while signalling its readiness to act if inflation expectations slipped.
Inflation rose to 4.1% in March from February's 2.4%, the fastest pace in 20 months, breaching the BSP's 2% to 4% target, due largely to double-digit increases in gasoline and diesel prices.
Philippine President Ferdinand Marcos Jr, who declared a state of national energy emergency last month, has suspended the collection of excise taxes on kerosene and liquified petroleum gas, widely used for cooking, to help cushion households from soaring costs.
S&P Global and Fitch have cut the Philippines' sovereign outlook, citing heightened risks to the fuel-import-dependent economy from the war in the Middle East. - Reuters
