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Philippines CB Signals Rate Hike

Philippines CB Signals Rate HikePhilippines CB Signals Rate Hike

Philippine central bank Governor Nestor Espenilla flagged another interest-rate hike to curb inflation and said an out-of-cycle policy meeting is an option, while warning he will go after currency speculators, Bloomberg reported. “The Bangko Sentral ng Pilipinas will take strong immediate action using the full range of instruments in its toolkit in order to respond to the emerging threats to inflation and inflation expectations,” Espenilla said in a mobile-phone message reply to questions Friday. “The follow-through actions will also address other threats to higher inflation such as excessive exchange-rate volatility not consistent with underlying macroeconomic fundamentals,” he said. A policy rate meeting outside of the scheduled six-week cycle is an option, he said. If that happens, that would be the first such meeting since the BSP adopted inflation targeting in 2002. Espenilla, who’s facing a crucial test since taking office last year, has been stepping up his rhetoric after inflation exceeded 6% for the first time since 2009 in August. A slumping currency is adding to his headache, with the peso falling to the weakest level since 2005 this week.

 

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