Home Economy BSP to respond, but not match Fed rate hikes

BSP to respond, but not match Fed rate hikes

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The Philippine central bank will respond to the US Federal Reserve’s policy tightening, but does not have to match the magnitude of its rate hikes, its governor said on Friday.

“We will not match them (the Fed) point by point,” said Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla, in an ambush interview with reporters.

The Southeast Asian nation’s monetary policy remains accommodative and supportive of growth, Mr. Medalla told a business forum.

BSP increased its benchmark interest rates by half a percentage point to 3.75% on Thursday, as expected, ahead of a widely anticipated 50 or 75 basis points rate hike by the Fed next month.

“If they do (raise rates by 75 basis points) … that needs a reaction,” Mr. Medalla said.

BSP will consider a pause in rate hikes if the Fed “has very mild increases” or if the US goes into a “fairly deep recession,” he added.

“One scenario is the pause starts next meeting. The other scenario the pause starts two meetings from now. The other one, the pause comes next year. All of these are possible at this point,” Mr. Medalla said. — Keisha B. Ta-asan with Reuters

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