The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) in a widely expected move raised its benchmark interest rates and Special Deposit Accounts (SDA) by 25 basis points each during its meeting on Thursday to rein in inflation.
The interest rate hikes follow a similar action taken by the Monetary Board in its July 31 meeting.
The rate for the overnight borrowing, or reverse repurchase (RRP) facility now stands at 4.0 percent, up from 3.75 percent, and the rate for overnight lending, or repurchase facility, has been raised from 5.75 percent to 6.0 percent.
Similarly, it hiked the interest rate paid on special deposit accounts to 2.5 percent from 2.25 percent.
In a statement, the BSP said the Monetary Board deemed it necessary to “respond with stronger policy action” to rein in inflation expectations, as the inflation target of 3 to 5 percent for 2014 remains at risk.
Headline inflation in August was recorded at 4.9 percent, unchanged from July, but still very close to the upper bound of the government’s inflation target.