Philippine Economic Planning Secretary Arsenio Balisacan. REUTERS/Lisa Marie David/File photo
MANILA – The Philippines’ economic minister on Friday cautioned against further central bank interest rate hikes that he said could hurt consumers already reeling from high inflation.
“If I were in the monetary board, I would say no (to rate hikes). We are the most aggressive in the region in raising interest rates,” Socioeconomic Planning Secretary Arsenio Balisacan told a press briefing.
Annual inflation quickened for a second month in September due mainly to the faster pace of increases in food and transport costs, raising the possibility the central bank would resume hiking rates at its meeting in November.
READ: PH inflation rose to 6.1% in Sept as food prices, transport cost soared
The 6.1 percent inflation in September, which was the fastest in four months and above the 5.3 percent rate in August, brought the year-to-date average inflation to 6.6 percent, well outside the central bank’s 2 percent-4 percent target for the year.
But Balisacan, who is not a member of the central bank’s policy-making monetary board, said raising interest rates “can hurt” the economy and consumers.
“The source of the inflation is supply side. It is not the demand side that requires a monetary solution,” Balisacan said.
He said he was also wary of the impact of higher interest rates on the peso for that could make the local currency stronger and make the country’s exports more expensive, Balisacan said.
“A relatively weak peso can make the economy grow faster,” Balisacan said.
Despite downside risks to growth, Balisacan said the government is not giving up on its 6 percent-7 percent target for the year.