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BSP Hikes Policy Rates

09.08.2000

“The Monetary Board today decided to raise the Bangko Sentral ng Pilipinas’ policy rates by  100 basis points  effective Monday, 11 September 2000.   The increase brings the overnight borrowing (RRP) and lending (RP) rates to 11.0  percent and 13.25  percent, respectively.   The three-tiered system for overnight placements  of banks will continue to be implemented,  as follows:  an  overnight RRP rate  of  11.0  percent will be offered  for  placements  of  up to P5 billion;  9.5 percent for  the next P5  billion, and 8.0 percent for placements in excess of P10 billion.”

“The policy rate adjustments are aimed at addressing emerging inflationary pressures that could arise from the pass-through effects of the weakening of the peso-dollar exchange rate. Other factors that could raise inflation are higher oil prices and possible wage adjustments. The rise in core inflation substantiates this trend.”

“The  adjustments in policy rates are in line with the  forward-looking approach to monetary policy which is expected to reduce the variability of inflation and output over time.  The policy rate adjustments are also aimed at addressing the narrowing differential between domestic and foreign interest rates,  and  the consequent shift  in  investors  preference  to us dollar-denominated   investments.”

 “The BSP will continue to monitor developments, and policy rates will be reviewed and adjusted as may be warranted by prevailing conditions.”

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