Tighter monetary policy in the Philippines

|By:, SA News Editor

The central bank boosted the rate on Special Deposit Accounts by 25bps to 2.25%, but held the benchmark overnight lending rate at 3.5%.

Inflation hit 4.5% in May, up from 2.6% a year ago and the highest in three years. The bank's in a tough spot as higher rates may be needed to cool inflation, but they - along with the fast-growing economy - could attract hot money flows into the country. Thus, the SDA rate was hiked to tighten liquidity, but the lending rate was held steady.

Analysts expect another 25 basis point rise in the SDA next month.

EPHE -1.1%