Monetary authorities in the United States are eyeing up to three interest rate hikes this year amid jitters currently dogging a Donald Trump presidency.
Last Dec. 14, the policy-setting Federal Open Market Committee unanimously voted to raise the key federal funds rate to the 0.5-0.75 percent range. This was only the second time that US interest rates were increased in the last 10 years, with the last action in December 2015.
US Fed officials expect three more hikes to bring the rate to 1.4 percent by end-2017, as Trump’s promises to jack up infrastructure spending while slashing taxes were seen to grow inflation faster.
In its medium-term development blueprint, President Duterte’s administration acknowledged the risks coming from these looming US Fed rate adjustments.
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“The recent pronouncement of the US Fed to hike the fund rate can have repercussions on the sector in the medium- to long-term. This will have an implication on the borrowing costs of the country. The same implications result from the depreciation of the currency,” the draft Philippine Development Plan (PDP) for 2017-2022 read.
In a recent speech, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said local monetary authorities would have to be on alert.
