GlobalSource Urges BSP to Raise Rates 50 Basis Points to 5.50% as Inflation Hits 7.2%
Updated
Updated · Philstar.com · Oct 22
GlobalSource Urges BSP to Raise Rates 50 Basis Points to 5.50% as Inflation Hits 7.2%
3 articles · Updated · Philstar.com · Oct 22
Summary
GlobalSource Partners called for a 50-basis-point BSP rate hike at Thursday’s meeting, saying a move to 5.50% would better contain worsening inflation than a smaller increase.
September headline inflation accelerated to 7.2% from 6.1% in August, while the nine-month average reached 5.4%—well above the BSP’s 2% to 4% target—and core inflation averaged 3.8%.
The economists said a weaker response could let price pressures become entrenched, forcing longer monetary tightening later as households and businesses adjust wages, prices and spending for persistently high inflation.
That case is complicated by weak demand: second-quarter GDP grew 2.3% and gross capital formation fell 9.2%, raising the risk that higher borrowing costs could further curb investment and consumption.
GlobalSource argued that failing to act decisively could still hurt growth, as elevated food, fuel and transport costs erode disposable income and trigger demand destruction even without further rate increases.
Will a drastic 50-basis-point rate hike save the Philippine economy from inflation, or push its fragile growth into a devastating recession?
With Philippine inflation soaring despite weak growth, can the central bank's aggressive tightening truly fix price pressures driven by weather and wages?