BSP Governor Benjamin Diokno
MANILA – The Bangko Sentral ng Pilipinas (BSP) does not need to mirror the Federal Reserve’s decision to hike its key rates, and its policy decision remains data-driven and anchored on domestic developments.
“I would like to reiterate that the BSP calibrates its monetary policy settings in response to external developments only to the extent that it will influence the outlook for growth and inflation,” BSP Governor Benjamin Diokno said in a virtual briefing aired over the central bank’s Facebook page on Thursday.
The Federal Open Market Committee (FOMC) hiked the Fed’s key rates by 0.25 percentage points to between 0.25 to 0.50 percent after its March 15-16 meeting.
This is the first rate increase decision since December 2018 and is targeted to address the surging US consumer price index (CPI), which registered its fastest annual rate in the last four decades at 7.9 percent as of February 2022.
BSP’s policy-making Monetary Board (MB) will have its rate setting meeting on March 24.
Diokno, who chairs the MB, said they will discuss their own inflation outlook, among others, during the meeting.
Aside from the policy rates, he said, the BSP has various tools aimed to deal with any short-term volatility and possible tightening of financial conditions.
These include the flexile exchange rate system, strong external buffers, macroprudential policy framework, and liquidity-enhancing and management tools.
“Nonetheless, our future monetary policy decision will continue to be data-driven and anchored on evolving domestic developments to avoid unintended consequences associated with protracted easy monetary conditions,” he added. (PNA)
