Marcos signals higher interest rates to fight rising prices

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Metro Manila (CNN Philippines, October 18) — Borrowing costs are expected to get more expensive in the coming months after President Ferdinand "Bongbong" Marcos Jr. indicated on Tuesday his policy to raise interest rates to temper surging consumer prices and defend the peso from further depreciation.

Following his meeting with economic managers, Marcos said the discussion focused on policy directions for the remainder of 2022 and the first quarter of next year.

Taming inflation remains the "number one priority," Marcos said.

"We will continue to use interest rates to mitigate the effects," he said in a Twitter post.

With small minimum wage adjustments, Filipinos have been coping with surging prices of commodities and services with difficulty, with inflation jumping to 6.9% in September, the highest in four years.

READ: High prices still hounding Filipinos in first months of Marcos presidency

The Bangko Sentral ng Pilipinas has set an inflation target of 2-4% this year.

Last month, the central bank raised the borrowing rate to 4.25%. Overnight deposit and lending rates were also bumped up to 3.75% and 4.75%, respectively.

This means Filipinos should brace for more costly loans for new cars, houses, and business capital, among others.

This would also force businesses and consumers to save more and spend less.

"We may have to defend the peso in the coming months, but the overall forecast is that we are still doing better than other countries in terms of inflation, though economic developments are still anticipated," Marcos said.

Earlier this month, the peso dropped to an all-time low of ₱59 against the greenback as the US Federal Reserve maintained its position to aggressively hike interest rates to tame rising domestic prices as well.