Philippines Holds Benchmark Rate as Inflation Pressure Mounts

  • All 17 economists surveyed correctly forecast rate kept at 3%
  • 2.7% inflation in January was the fastest pace in two years

The Philippines left its benchmark interest rate at a record low, opting to preserve its firepower even as inflation pressures rise.

Bangko Sentral ng Pilipinas kept the overnight reverse repurchase rate at 3 percent, it said in Manila on Thursday, as predicted by all 17 economists surveyed by Bloomberg.

The Philippines is forecast to be among the first to raise interest rates in Asia this year, with some economists predicting a move as early as this quarter. Consumer prices rose at the fastest pace in more than two years in January, and higher transportation fares approved this month in some cities add to risks.

“A tightening is forthcoming,” Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore, said before the decision. “Growth is strong and inflation risk is on the upside. I personally think a preemptive move is a pretty good thing to do but it is not yet urgent.”

The economy expanded 6.8 percent last year, faster than China’s and among the best performance in the world.

Click here to read how the Philippines is finally catching up with its fellow Asian tiger economies.

— With assistance by Clarissa Batino, Cecilia Yap, and Myungshin Cho

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