A noted economist criticized the recent BSP move raising the interest rate to a record 6% same as the inflation target for 2023. In so far as mopping up the money supply is concerned may be yes. But the rest of the population is all ready suffering from decreased purchasing power and so with companies employers. A high interest rate would likely be hindrance to increasing productivity to handle the supply side
Of course there is no silver bullet to this problem The problem was caused by indiscretion and collective efforts by previous administration to engage in wanton public infrastructure expenditures, and finance expansion of police and military expenditures. We are reaping the after effects.
The immediate effect would be raising credit card rates or installment credit or even home mortgages. Pag ibig loans rate may be floated. And means more monthly.
For companies borrowing rates will be higher. Cost of operation will be higher and may negate objective of lowering costs /prices
The raising of interest rate has the added disadvantage of causing unemployment and recession
