Philippine central bank raises interest rates

MANILA, Philippines (AP) — The Philippine central bank has raised key interest rates by a quarter percentage point for the second time in six weeks to stifle inflation.

The bank's Monetary Board on Thursday raised the rate it charges commercial banks for overnight borrowing to 6.0 percent and the rate it pays lenders for overnight deposits to 4 percent.

Deputy Governor Diwa Guinigundo says the decision was made because forecasts put next year's inflation rate at 3.8 percent, close to the upper end of the bank's 2-4 percent target range. The ban forecasts an inflation rate of 4.5 percent this year.

He says possible increases in food prices due to tight domestic supply, a pending petition for utility rate increases and potential power shortages could push inflation higher.