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Philippine central bank weighs extraordinary meeting, hints at new rate hikes

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Philippine central bank weighs extraordinary meeting, hints at new rate hikes

The Philippine central bank may hold an extraordinary meeting this month to stem inflation amid an emerging-market currency selloff.

"The Bangko Sentral ng Pilipinas will take strong immediate action using the full range of instruments in its toolkit in order to respond to the emerging threats to inflation and inflation expectations," BSP Governor Nestor Espenilla said in a mobile-phone message to Bloomberg News.

Annual headline inflation rose to a nine-year high of 6.4% in August from 5.7% in July, above the central bank's 2018 target of 3%, plus or minus 1.0 percentage point.

Espenilla said the central bank will also address exchange rate volatility, adding that a policy meeting outside the one scheduled Sept. 27 is an option, Bloomberg reported.

The Philippine peso is down nearly 7% against the U.S. dollar this year.

The central bank announced Sept. 7 that it will reactivate the currency risk protection program, which aims to "alleviate demand pressures in the foreign exchange spot market from borrowers seeking to hedge their future foreign exchange exposures."

The Philippines numbers among emerging markets facing mounting pressure as the U.S. dollar strengthens and monetary policy tightens in advanced economies.

The central bank has raised its benchmark interest rate three times in 2018, by a total of 100 basis points.