By Jillian Marielle Tiraña

PHOTO: Veejay Villafranca/Bloomberg/Getty Images

Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla has announced the increase of the BSP overnight reverse repurchase facility’s interest rate to 3.25 percent from 2.50 percent on Thursday.

Medalla reasoned that the increase was implemented to manage "spillovers" from other countries that would have a negative impact on the economy as well as to contain the risk caused by rising inflation.

"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 normalization of monetary policy settings," he said.

Raising the interest hikes correspond to more expensive loans, less consumer demand, decrease in prices of goods and services, and decline of the inflation rate.

Medalla also reassured the public that the BSP will continue to take "further necessary actions" to ensure the stability of prices and meet their inflation targets.

"At the same time, the Monetary Board continues to urge timely non-monetary government interventions to mitigate the impact of persistent supply-side pressures on commodity prices," he added.

The new policy also issued a corresponding raise on overnight deposit and lending facilities which were raised to 2.75 percent and 3.75 percent from 2 and 3 percent, respectively.

According to BSP Deputy Governor Francisco Dakila, the last time an adjustment this extensive was made was on June 23, 2016, when rates were reduced from 4 percent to 3 percent.

Dakila noted that the scheduled monetary policy-setting meeting on August 18 will push through and revisions on inflation numbers will be made by then using their latest gathered data.

Edited by Christine Gaile Dimatatac