THE Philippine central bank, struggling to spur growth and slow the fastest inflation in three years, is reluctant to raise interest rates on concern it could boost the peso.

“Tightening could lead to a wider interest-rate differential that could attract capital inflows,” Governor Amando Tetangco Jr. said in a speech delivered Wednesday. That could exert “more pressure on the exchange rate,” damp exports and slow growth, he said in the speech e-mailed to Bloomberg News last night.

The Bangko Sentral ng Pilipinas’ key interest rate is at a 16-year low of 5 percent, and surging inflation amid prospects of slower growth have created a “monetary policy dilemma,” Tetangco said. Rising oil and food prices may hurt consumer spending and slow growth in the Philippines to as little as 6.1 percent this year, Finance Secretary Gary Teves said this week.

“The central bank is signaling it prefers growth while inflation is driven by external factors,” said Marvin Fausto, who oversees about $6 billion in assets as chief investment officer at Manila-based Banco de Oro Unibank Inc. That’s “doing the right thing because by tightening now, you’ll only choke the economy.”

Governments in Asia, where about 600 million people survive on less than $1 a day, are torn between the need to rein in surging prices and shoring up growth as a US slowdown hurts demand for the region’s exports. The International Monetary Fund last month lowered its forecast for global growth this year and said there’s a 25- percent chance of a world recession.

The peso, last year’s best performer in the region, fell to its lowest level in six months. The currency slid to P43.24 per dollar at the close of trading in Manila. Three-year bond yields fell to the lowest in two weeks on speculation the central bank won’t raise its key rate.

“In the face of slowing growth and rising inflationary pressures, it would be difficult for monetary policy to be accommodative,” Tetangco said.

Asian central banks have less room to cut interest rates to spur growth as the US economy slows because inflation in the region is accelerating, Subir Gokarn, Asia-Pacific chief economist at Standard & Poor’s, said April 30. (Bloomberg)

THE reporting system imposed on banks that trade government securities using the platform of the Philippine Dealing and Exchange Corp., or Pdex, forces banks to violate deposit- secrecy rules.

THE peso yesterday extended its loss after oil prices soared to record levels, raising import cost and increasing corporate demand, currency traders said.  

THE Philippine central bank, struggling to spur growth and slow the fastest inflation in three years, is reluctant to raise interest rates on concern it could boost the peso.

PHILIPPINE banks are lending themselves at levels prevalent prior to the 1997 financial crisis, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.

THE Land Bank of the Philippines is extending P4.3 billion as credit to qualified growers of jatropha, the bank said Wednesday.

The qualified growers include cooperatives, small and medium entrepreneurs and farmers’ organizations.

FIRST Gen Corp. (First Gen) said Wednesday its wholly owned subsidiary Unified Holdings Corp. plans to offer debt securities to raise much-needed capital.