MANILA, Sept. 22 (Xinhua) -- The Philippine central bank on Thursday decided to hike the interest rate on the overnight reverse repurchase facility again by 50 basis points to 4.25 percent to curb "broadening" inflation.

The new interest rate policy will be effective on Friday.

Bangko Sentral ng Pilipinas (BSP) said the Monetary Board also decided to raise the interest rates on the overnight deposit and lending facilities to 3.75 percent and 4.75 percent, respectively.

The BSP's latest baseline forecasts show that average inflation is still projected to breach the upper end of the 2-4 percent target range at 5.6 percent in 2022 and 4.1 percent in 2023. Meanwhile, the forecast for 2024 eases to 3.0 percent.

In deciding to raise the policy rate anew, the BSP noted that "price pressures continue to broaden." "The rise in core inflation indicates emerging demand-side pressures on inflation."

The BSP said the risks to the inflation outlook remain tilted toward the upside until 2023 and broadly balanced in 2024.

"Price pressures may continue to emanate from the potential impact of higher global non-oil prices, pending petitions for further transport fare hikes, the impact of weather disturbances on prices of food items, as well as the sharp increase in the price of sugar," the BSP said.

Meanwhile, the BSP said the impact of a weaker-than-expected global economic recovery continues to be the main downside risk to the outlook.

Given elevated uncertainty and the predominance of upside risks to the inflation environment, the Monetary Board recognized the need for follow-through action to anchor inflation expectations and prevent price pressures from becoming further entrenched.

The BSP urges the government to implement timely non-monetary interventions to mitigate the impact of persistent supply-side pressures on food and other commodity prices. Enditem

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