Analysts: BSP to raise interest rates by 50 basis points

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Metro Manila (CNN Philippines, August 3) — Analysts forecast another hike in borrowing rates.

Economists surveyed by CNN Philippines' Business Roundup said that the Monetary Board, the policy-making arm of the Bangko Sentral ng Pilipinas, would raise interest rates this month by 50 basis points.

The BSP has consistently tightened monetary policy by 25 basis points in the past two meetings of the Monetary Board. The interest rate is currently set at 3.5 percent.

Security Bank Economist Angelo Taningco said that he expects another 50 basis point increase in interest rates to curb inflation. He also said that inflation would quicken to 5.7 percent in July.

On the other hand, University of Asia and Pacific professor and economist Bernardo Villegas said that inflation could slow down to below 5 percent in July.

Nomura Global Markets Research, in a press statement, also expects the BSP to raise interest rates by 50 basis points.

"Rising inflation and inflation expectations, which we have argued are the main policy parameters that will prompt BSP action, are underpinning the signals for a stronger policy adjustment in the near term," Nomura Global Markets Research said.

It expects inflation to pick up at 5.6 percent in July, from the 5.2 percent recorded in June.

The Monetary Board will have its next meeting on August 9. The Philippine Statistics Authority is expected to release the inflation report on or before August 7.

READ: BSP hints at possible August interest rate hike