DOF: PH's interest rate hikes enough
At A Glance
- Finance Secretary Benjamin Diokno stated that there is a global consensus that central banks, including the Philippines, have implemented sufficient interest rate hikes to address the escalating consumer prices.<br>Diokno agreed with NEDA Secretary Arsenio M. Balisacan's assertion and emphasized that raising interest rates further would be detrimental to the domestic economy.<br>Balisacan earlier noted that the Philippines has been the most aggressive in the region in terms of raising interest rates.<br>BSP Governor Eli Remolona Jr. said earlier that rate hikes are still a possibility due to elevated inflation levels.<br>Headline inflation increased to 6.1 percent in September, while core inflation (excluding volatile oil and food items) decreased to 5.9 percent.<br>Balisacan highlighted that the source of inflation is primarily on the supply side, suggesting that a monetary solution may not be the most effective approach.<br>alisacan expressed concerns about the long-term effects of further interest rate hikes on the economy, consumers, and producers.
Finance Secretary Benjamin E. Diokno said there is a global consensus that central banks, including the Philippines, have implemented sufficient interest rate hikes to address the escalating consumer prices.
During the Chat with SBED briefing on Friday, Oct. 6, Diokno concurred with the assertion made by National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan that raising interest rates is no longer necessary at present.
Diokno further said that the increased interest rates have already had an impact on the Philippine economy.
"I think there’s already an [economic] slowdown globally, and that the consensus right now is we have done enough [interest rate hikes],” Diokno, who sits on the Monetary Board, said.
The Bangko Sentral ng Pilipinas (BSP) has raised interest rates by a cumulative 425 basis points since last year in order to mitigate the surge in inflation.
Last Friday, Balisacan said that raising interest rates any further would negatively impact the domestic economy.
"If I were in the Monetary Board, I would say no [to policy rate hike]. Because we have been the most aggressive in our region in raising interest rates,” Balisacan said.
BSP Governor Eli Remolona Jr. earlier said that rate hikes are still a possibility due to elevated inflation.
Headline inflation accelerated to 6.1 percent in September from 5.3 percent in August.
However, Balisacan emphasized that a rate hike is unnecessary given the ongoing decline in core inflation.
Core inflation which excludes volatile oil and food items, went down to 5.9 percent from 6.1 percent in August.
"We know that raising the interest rates will hurt the economy, will hurt the consumers and producers. That has long-term effects also in the succeeding 12 months,” Balisacan said.
“On the other hand, we know also very well that the source of the inflation is on the supply side, it's not the usual demand side that requires monetary solution," he added.
He emphasized that since the inflationary pressures originate from the supply side, a monetary solution may not be the most effective approach.
"Our position is to ensure that the peso remains competitive because a very strong peso relative to our trading partners and peers in the region, hurt our exporters, local producers," he said.