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Philippines: No drastic change in BSP policy
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) will continue to be patient, with no drastic change in the country’s accommodative monetary policy stance, vowing to do whatever it takes to help the economy fully recover from the impact of the pandemic.
In an interview with ABS-CBN News Channel, BSP Governor Benjamin Diokno said the central bank would continue to support the national government amid the projected slower recovery from the pandemic-induced recession.
“On the part of the BSP, we will continue to be patient and supportive of the efforts to sustain the recovery process. We have turned the corner, but as I’ve said before, it is still a fragile recovery, and so we will continue to be patient and supportive of the national government,” Diokno said.
The BSP emerged as one of the most aggressive central banks in the world, doing the heavy lifting by slashing interest rates by 200 basis points and lowering the reserve requirement ratio to cushion the impact of the pandemic on the economy.
“So there will be no drastic change in the current monetary policy. Of course we will remain to be data dependent, so we look at what is happening externally and what is happening domestically,” Diokno said.
Last Aug. 12, the BSP kept interest rates at record lows for the sixth straight rate-setting meeting. The central bank last tweaked interest rates when it delivered a surprise 25-basis-point cut in November last year.
Despite exiting the pandemic-induced recession with a strong 11.8 percent gross domestic product (GDP) growth in the second quarter, economic managers through the Development Budget Coordination Committee (DBCC) lowered anew their GDP growth target for the year to a range of four to five percent due to intermittent lockdowns caused by the resurgence of COVID infections.
“If we’re shooting for four percent, that means 4.3 percent in the second half and that’s doable because if you look at third quarter and fourth quarter growth last year, it’s pretty high, high negative, so that’s doable,” Diokno said.
Based on its latest assessment, the BSP sees inflation exceeding the two to four percent target at 4.1 percent for this year and 3.1 percent for 2022 and 2023.
“The other reason why we can continue to be patient is because we are optimist that inflation will be back to our target range within two to four percent in 2022 and 2023,” he said.
The BSP chief said the BSP is still hopeful of meeting the two to four percent target as the global oil prices are on a downtrend.
Source: https://www.philstar.com/business/2021/08/24/2122104/no-drastic-change-bsp-policy