BSP to reprimand quiet period violators

MANILA, Philippines — While no formal penalties are enforced for violating the quiet period policy of the Bangko Sentral ng Pilipinas, any breaches could result in a minor reprimand, officials from the BSP said.

During a media information session on Monday, BSP Deputy Governor Francisco Dakila Jr. said there are no specific penalties for officials who violate the quiet period policy, which refers to a time when the central bank restricts public communication around monetary policy decisions.

“But of course, if there are guidelines and then (an official) talks (about monetary policy) anyway, the attention (of the official) can be drawn. That’s it,” he said. “I think the guidelines are clear.”

Dakila noted that in the seven-day period before the BSP’s policy decision, the technical staff refrained from accepting any press briefings or engaging in public information campaigns on monetary policy.

Dennis Lapid, director of the BSP’s Department of Economic Research, said the guidelines aim to formalize that BSP officials should avoid making any comments days before the monetary policy meeting.

Lapid said if there was no quiet period policy in place, there is a risk that officials may create “more noise than signals” when they comment on key data releases on inflation and economic growth

“In those cases, I think it can be a little difficult sometimes to interpret the data. So I think this policy just tries to ensure that there’s sufficient internal discussion before any sort of public disclosure is made from any official,” Lapid added.

However, the central bank gives flexibility to the BSP governor, who is the only official allowed to comment on policy-related issues during the quiet period.

“In certain cases, especially during periods of market stress or financial turmoil, some disclosure can be useful especially in terms of calming down markets or giving some reassurance to the markets,” Lapid added.

In its monetary policy report, the BSP said it recognizes the importance of coherence and transparency in its communications on monetary policy.

“In its own experience, the BSP has found that effective forward guidance requires transparency, consistency in messaging, and a unified voice in conveying the intention and direction of monetary policy,” the central bank said.

“Moving forward, the BSP will continue to explore possible enhancements to its communication practices, in line with its commitment to a high level of transparency and accountability,” it added.