BSP sees need for 'measured adjustments' in monetary policy

MANILA, Philippines (Xinhua) - The central bank said today that it may undertake "measured adjustments" of key policy rates after the US Federal Reserve announced that it may raise interest rate next year.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco, Jr. said an "early and gradual adjustment" in key rates will be less disruptive to local businesses.

"We see early measured adjustments in monetary policy as ideal. Gradual rather than discrete movements would be less disruptive and would help businesses plan better," said Tetangco.

He also said tweaking key policy rates may be warranted due to geopolitical risks such as the tension between western countries and Russia over Ukraine which could result in volatility in commodity prices.

The BSP's policy-making Monetary Board will hold its next rate- setting meeting on March 27. The local central bank have kept overnight borrowing and overnight lending rates at 3.5 percent and 5.5 percent, respectively, since October 2012.

The Philippine central bank said earlier that its policy stance remains appropriate although Tetangco admitted that the space to keep key policy rates steady is "narrowing" due to the projected hike in inflation this year.

Inflation this year is forecast to average 4.3 percent, higher than the 3 percent recorded last year.