MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) will keep financial volatility in check and sees no reason to change its monetary policy stance at the moment, BSP Governor Amando M. Tetangco Jr. said yesterday.
“For the moment, BSP is geared to keep the interim financial volatility in check,” Tetangco told reporters in a text message.
“We don’t yet see a strong impetus to change the stance of monetary policy,” he said.
His remarks came after the European Central Bank launched a government bond-buying program which will pump hundreds of billions in new money into a sagging euro zone economy.
“The ECB action to further ease monetary conditions in EU should boost market confidence near-term especially as the “announcement uncertainty” is eliminated,” Tetangco said.
“But in the medium-term, this needs to be followed through by structural reforms in the national economies and adjustments in EU labor market conditions, among others,” he said.
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The action came following earlier actions of the ECB that still left the euro zone economy with stagnating growth and persistent low inflation.
“While we had been anticipating QE (quantitative easing) from EU for some time now, and the price action in markets in recent months has reflected the divergence in AE (advanced economies’) monetary policies, we still need to see how this policy divergence will continue to play out now that we are in a situation of very low oil prices,” Tetangco said.
“For the moment, the BSP is geared to keep the interim financial volatility in check,” he said.
Continued unevenness expected in global economic activity this year should allow central banks to pursue different policy paths, BSP Deputy Governor Diwa C. Guinigundo said in a separate briefing.
The ECB and Bank of Japan are both adopting accommodative monetary policies to boost growth, while the US Federal Reserve, which in October ended its own asset-buying program, is now seen raising its near-zero rates for the first time in seven years.
Looking at emerging economies, key policy rates were reduced in India, South Korea, and Thailand, while the same was hiked in Indonesia and Malaysia.
“These contrasting policy directions in both advanced and emerging economies underpin the risk of capital flow volatility and financial market turbulence particularly in emerging markets including the Philippines,” Guinigundo said.
“Overall, the prospects of uneven growth path of the global settings provides opportunity for the philippine economy to display its resilience and to push further its structural reforms and among them of course include infrastructure development and continued financial reforms,” he said.