President Benigno S. Aquino III tours the exhibit area upon arrival for the Philippine Business for Social Progress (PBSP) Membership Meeting and launch of Mindanao Inclusive Agribusiness Program at the SMX Convention Center in Lanang, Davao City on Monday (September 08). The event aims to rally PBSP members and other Mindanao companies around the idea of inclusive business on priority industries: coffee, cacao, corn, palm oil and rubber, as well as possible investments in Bangsamoro. (MNS photo)
MANILA (AFP) – Philippine monetary authorities raised key interest rates Thursday for the second time in six weeks, saying they needed to head off the threat of higher inflation next year.
The central bank said it raised its overnight borrowing and lending rates by 25 basis points to 4.0 and 6.0 percent respectively, the same increment as the last increase on July 31.
“The Monetary Board’s decision is based on the assessment that the inflation target, particularly for 2015, remains at risk,” the bank said in a statement.
It was now likely the Philippines would hit the higher end of its inflation target range of 2.0-4.0 percent, it added.
It said there were price pressures arising from possible further increases in food prices due to tight domestic supply, as well as pending petitions for higher utility rates and potential power shortages.
President Benigno Aquino warned Thursday that the country’s energy reserves were thin due to high economic growth and ageing power plants that needed more frequent maintenance shutdowns.
“I am told that the worst case scenario even involves a shortage of around a 1,000 megawatts” early next year, he said in a speech Thursday as he attended the launching of a power plant project near Manila.
The Philippines has an installed capacity of just under 30,000 megawatts.
Inflation rose 4.9 percent in August, bringing the year-to-date average at 4.4 percent.
The government previously targeted an inflation rate ranging from 3.0 to 5.0 percent for the whole of 2014.
The July interest rate increase had been the first in the Philippines since May 2011.