Philippines central bank sees above-target inflation continuing, minutes report

By Richard Connell

New York, Sept. 25 - The Bangko Sentral ng Pilipinas, forecasting above-target inflation for both 2008 and 2009, raised its overnight borrowing rate by 25 bps to 6% at its Aug. 28 meeting, according to minutes released Thursday.

The monetary board of the Philippines central bank discussed the easing of both oil and food prices, which have been major factors in driving inflation in previous inflation episodes.

The board also considered the fact that headline inflation climbed to a 12.2% level in July, bringing it to its highest rate since 1991.

The board concurred that the monetary policy tightening was necessary to bring inflation closer to the target level and to help manage inflation expectations.

This marks the third consecutive increase by the board, which has raised the overnight rate by 1% since June.

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