Philippines, Manila- The Central Bank of the Philippines or Bangko Sentral ng Pilipinas sees the raise of its interest rates along with the inflation that still pushes high in the country.
As it is expected widely in the country, the government announced in August that inflation has risen to about 6.4%, higher than the forecast of the government of about 5.9% in July. It is estimated that inflation in 2019 will hit to about 4.3% that surpasses the original forecast, but the forecast also sees the inflation to slow down to about 3.7% by 2020.
The increase in the interest rates is the most forceful action against inflation since 2000. Bangko Sentral ng Pilipinas (BSP) said in a statement that the further tightening of monetary policy was caused by persistent signs of sustained and broadening price pressure and this was recognized by the monetary board.
Some economist and market practitioners believe that the BSP will not increase benchmark interest because the increase in inflation was mostly caused by factors like the shortage of rice and to the weather disturbances. Hence, nonmonetary measures are the better solution to the issue.
The government has yet to solve the problem of inflation in the Philippines and providing ways on how to return to the target rate of about 2-4% must be focused on. Bangko Sentral ng Pilipinas will still be facing challenges with the inflation that is happening in the country.