The Philippine central bank raised its benchmark interest rate for the first time since 2014 to stem rising inflationary pressure and help support a depreciating currency.
Bangko Sentral ng Pilipinas increased the overnight reverse repurchase rate to 3.25 percent from a record-low 3 percent, it said in a statement in Manila yesterday.
Thirteen of 16 economists predicted the decision, with the rest expecting no change.
Bank Governor Nestor Espenilla is fighting to prevent inflationary pressure from spreading and the peso from weakening further.
Economic growth quickened to 6.8 percent last quarter from a year earlier, a report earlier yesterday showed. That matched the median estimate of 17 economists in a Bloomberg survey and compared with annual growth of 6.5 percent in the previous quarter.
Compared with the previous quarter, GDP grew 1.5 percent last quarter.
Philippine President Rodrigo Duterte is boosting spending to a record to sustain one of the world’s fastest-growing economies.
Projects include bridges and a subway to help ease traffic in the capital, another international airport north of Manila and railways to the provinces.
The booming economy has raised concerns about overheating and the Philippines is now home to the fastest inflation among Southeast Asia’s largest economies since January.
Consumer prices rose 4.5 percent last month from a year ago.
The central bank targets for inflation to average 2 percent to 4 percent from this year until 2020.
Central bankers face their toughest test since the 2013 taper tantrum as US interest rates increase. Malaysia and Singapore tightened earlier this year, and Indonesia is also facing pressure to follow as its currency slides, but lackluster growth might keep it from doing so.
The Philippine peso has declined more than 3 percent against the US dollar this year.
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