BSP's jumbo rate hike unlikely to dampen consumer activities, say groups

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Metro Manila (CNN Philippines, November 18) — The latest interest rate hike by the Bangko Sentral ng Pilipinas (BSP) is not expected to affect businesses, according to retailers and rural bank groups.

The BSP increased the cost of borrowing by 75 basis points - bumping up the key interest rate to 5% effective Friday - in a bid to temper high prices and prop the peso up against the dollar.

But the Rural Bankers Association of the Philippines (RBAP) said micro and small businesses are still applying for loans.

"The MSMEs have strong motivation to patronize rural bank and cooperative banks, given that, number one, the credit needs. Their credit needs are often too small for bigger banks to service," RBAP President Mary Ann Tupasi-Saddul told CNN Philippines' The Exchange.

"Number 2, the leaner decision-making structures of rural and cooperative banks also translate to faster turnaround. With the economy opening up, people need capital," he added.

Meanwhile, the Philippine Retailers Association said the retail sector will be in good state as Filipinos are still expected to shop with the approaching holiday season.

"The Philippines is a consumer driven economy and we expect people to still go out and shop. Many of the employees receiving their bonuses already or 13th month pay, and of course remittances coming from OFWs. I guess retail should be good and we have seen that in the past months," the group's president Rosemarie Ong said.