This post watched the interview at PTV with Managing Director Toni Lambino Managing Director of BSP for strategic communication. Topics discussed were the interest rate increased and the new polymer 1,000 peso bill.
Really will the rising prices be solved by the interest rate increase? Well may be partially. The interest rate increase will slow down the money supply growth and or siphon off exces liquidity in the system. Well this will work to curb large ticket items purchases, cap ex, and speculation on foreign currency, This will not do much about
1. Expensive petroleum products from the middle east of US supplier
2. Supply pressure due to high fuel costs, supply chain problems
3. Low productivity
4. High input costs for say agriculture products
5. Commuting costs.
It safe to say that the increase of interest rate MAY help arrest increase of prices.
This is really a big problem for consumer confronted by high commuting cost, price of basic commodities
food and agri products.
They say that petroleum products decreased in prices because of higher interest rate by US Fed. It may work well for macro in US whose goal is to come up with financial products to soak up US dollars elsewhere floating in the world If that was not to happy, US can become a center of hyper infflation
