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Singapore, Philippines tighten monetary policy to combat inflation fears Today Philippines News

Singapore as well as the Philippines central banks have announced a surprising tightening of their monetary policy, the latest indicator of increased fears of inflation across Asia Pacific. Asia Pacific.

Bangko Sentral ng Pilipinas (BSP) increased their benchmark interest rates by 0.75 percent in an unscheduled rate increase on Thursday. The central bank indicated it was prepared to further take action to curb rising inflation.

The increase brings the overnight borrowing rate up to 3.25 percent. This follows two rate hikes back-to-back of 0.25 percent in June and May.

The tightening took place as a prelude to BSP’s policy meeting, which is set for 18 August.

“In raising the policy interest rate anew, the Monetary Board recognized that a significant further tightening of monetary policy was warranted by signs of sustained and broadening price pressures amid the ongoing normalisation of monetary policy settings,” BSP Governor Felipe Medalla said, adding that the central bank was ready to adopt “further necessary actions to steer inflation towards a target-consistent path over the medium term”.

“To say this is an unusual move by the BSP is an understatement, given that they have been amongst the most dovish and reluctant hikers in Asia,” Jeffrey Halley, senior market analyst for Asia Pacific in OANDA In an email.

“The US Consumer Price Index and the MAS move today, along with the relentless pressure on the Philippines Peso have swayed BSP’s hand, underling the pressures facing Asian central banks now.”

Singapore’s central bank has also tightened its monetary policy in an unannounced move that sent Singapore’s currency Singapore dollars 0.7 percent up.

This marked the fourth time of tightening over just nine months from the Monetary Authority of Singapore, that manages monetary policy by the setting of exchange rates in lieu of rates for interest because of the large trade flows that flow through the city-state.

The actions of Philippine authorities and Singapore authorities came just a morning after central banks in South Korea and New Zealand increased their base interest rates by half a percentage.

The United States, the Federal Reserve is widely expected to announce a historic one percentage point rate hike this month.rate increase this month after inflation in the last month reached the record at 9.1 percent.

It is estimated that inflation rates in Philippines has reached its highest levels in more than the past four months in June. It is widely anticipated to surpass the target range of 2-4 percent for the rest of the year.

Singapore’s central bank is forecasting an inflation rate in the range of 3-4 percent over the entire year, which is which is up from the previous estimate of 2.5-3.5 percent.

The central bank also expects the country’s Gross Domestic Product (GDP) increase will be near the lower part of its forecast for 3-5 percent as preliminary data released on Thursday revealed that Singapore’s GDP increased 4.8 percent during the second quarter, exceeding expectations.

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