The Bangko Sentral ng Pilipinas intensified its aggressive fight against inflation and raised overnight rates by substantial50 basis points to 4.25 percent on Thursday.

BSP Governor Felipe Medalla said the rate increase is still "accommodative," adding that achieving a target-consistent path of inflation is "of great importance to us." "Respectable growth is still possible under these terms, but for the BSP, price stability, one of our pillars, is the primary concern," he added.

"The interest rates on the overnight deposit and lending facilities were raised to 3.75 percent and 4.75 percent, respectively," Bangko Sentral ng Pilipinas Deputy Governor Francisco Dakila Jr. said during the media briefing.

Moreover, he said that the BSP's latest baseline forecasts show that average inflation is still projected to breach the upper end of the 2 percent to 4 percent target range at 5.6 percent in 2022.

"The forecast for 2023 has also increased slightly to 4.1 percent. Meanwhile, the forecast for 2024 eases to 3.0 percent," Dakila added.

In deciding to raise the policy rate anew, the MB noted that price pressures continue to broaden.

The rise in core inflation indicates emerging demand-side pressures on inflation.

"Moreover, second-round effects continue to manifest, with inflation expectations remaining elevated in September following the approved minimum wage and transport fare increases," the deputy governor said.

Nonetheless, inflation expectations continue to be broadly anchored over the medium term.

The risks to the inflation outlook remain tilted toward the upside until 2023 and broadly balanced in 2024.

Price pressures may continue to emanate from the potential impact of higher global non-oil prices, pending petitions for further transport fare hikes, the impact of weather disturbances on prices of food items, as well as the sharp increase in the price of sugar.

Meanwhile, the impact of a weaker-than-expected global economic recovery continues to be the main downside risk to the outlook.

Given elevated uncertainty and the predominance of upside risks to the inflation environment, the MB recognized the need for follow-through action to anchor inflation expectations and prevent price pressures from becoming further entrenched.

Dakila also said that the domestic economy could accommodate a reasonable tightening of the monetary policy stance, as demand has generally held firm owing to improved employment outturns and ample liquidity and credit.

At the same time, the MB also continues to urge the national government to implement timely non-monetary interventions to mitigate the impact of persistent supply-side pressures on food and other commodity prices.

"The BSP reiterates its commitment to take all necessary actions to steer inflation toward a target-consistent path over the medium term, consistent with its primary mandate to promote price and financial stability," Dakila added.