BSP sees no urgency to change rates

MANILA, Philippines - Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr said the central bank saw “no urgency” to change its monetary stance at a policy meeting today as the inflation outlook remains benign.

“Looking at the inflation environment, the outlook remains benign. At this point in time, it is subject to discussions tomorrow (today), but there seems to be no urgency to modify or alter the stance in monetary policy,” Tetangco said.

Inflation stood at 2.8 percent in the first eight months of the year, below the central bank’s target range of three to five percent.

This, together with robust economic growth, has allowed the BSP to keep rates steady since the start of the year.

BSP Deputy Governor Diwa C. Guinigundo, in an interview with reporters, said the impending tapering off of the US Federal Reserve’s stimulus program will be one of the main factors that will be considered in today’s policy meeting.

Guinigundo explained this continues to create volatility as investors second guess the timing of the US Fed’s move to scale back bond purchases

Financial markets are now watchful of the Federal Open Market Committee’s next meeting on Sept. 17 to 18, during which the Fed may decide to start reducing its bond-buying program. 

The impending tapering, hinted in May, already prompted sell-offs in emerging markets including the Philippines.

Emerging economies were once safe havens for investors amid a downturn in the US and the euro zone. However, improving conditions abroad have caused emerging markets to experience capital flight as funds shifted back to the developed economies.

But Guinigundo stressed the Monetary Board will also look at all possible developments abroad that may affect the Philippine markets, domestic prices and the economy in general.