MANILA – The Bangko Sentral ng Pilipinas yesterday announced the 25 basis point cut to 4.25 percent in the interest rate of central bank’s Peso rediscount facility starting Jan. 24.

“The Peso rediscount rate is based on the applicable BSP overnight reverse repurchase rate per Circular No. 679 dated 1 February 2010,” the central bank said in a statement.

Central bank’s policy-making Monetary Board cut by 25 basis points BSP’s key policy rates supported by the within-target inflation projection until next year to boost growth of the domestic economy.

Monetary officials now project inflation rate this year to average at 3.1 percent from 3.51 percent last December.

While forecast for next year’s average inflation went up to 3.4 percent from 3.12 percent previously on account of the upside risks namely oil and power rate hikes as well as second round effects.

BSP Deputy Governor Diwa Guinigundo earlier said there is a pending petition for power rate hikes from the Philippine Power Sector Assets and Liabilities Management, National Power Corporation and the National Grid Corp.

“If those three outstanding petitions do materialize then they will also affect probably parts of 2012 and 2013,” he said.

Guinigundo also said second round effects as “very daunting” risks to inflation this year and the next.

He said oil price hikes will also increase transport cost and impact on wages.*PNA

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