The Bangko Sentral ng Pilipinas (BSP) is planning to increase interest rates in this week's Monetary Board meeting and until next year if needed to curb inflation, incoming BSP Governor Felipe Medalla said Monday.

May inflation jumped to 5.4 percent from 4.9 percent.

“Very frankly, the best thing to do is to signal to the market we are actually now preparing for a series of 25 basis point increase. Exactly how many? We know it’s at least two more (rate hikes) this year. And if necessary, more than two more, and if necessary, more increases in 2022,” Medalla said in a TV interview.

He warned that the increase should not be overused to control inflation since it would not be effective against global supply shocks.

“So the goal now is, whatever inflation is there, we prevent it from spilling over to the rest of the economy,” Medalla said.

“One way to do that is to signal that the BSP will keep on adjusting the policy rate until we’re comfortable that the change of inflation from one month to the next will be consistent from 2 to 4 percent. That’s why, I already said we are going to raise it by 0.25 this meeting and raise it by another 0.25 in August,” he added.

Medalla said that if everything stabilizes, the BSP will likely be able to bring back the inflation rate down to their target of 2-4 percent. Jaspearl Tan/DMS