Philippine central bank likely to hike key interest rate by 50 bps in September

The USD/PHP currency pair reached new highs this morning at 54.30, forming doubts that whether the central bank is able to calm down the market fears via rate hikes, noted Commerzbank in a research report.

The market widely anticipates that the Philippine’s central bank will hike its key interest rate this week by 50 basis points to 4.5 percent in order to fight against inflation and defend its ultra-weak currency. Nevertheless, real interest rates continue to be in significantly negative territory.

“That said, the currency is unlikely to get a relief unless a much tightened monetary policy stance can be confirmed”, added Commerzbank.