Philip­pine cen­tral bank says will also let peso ‘ad­just’ ver­sus US dol­lar in re­sponse to Fed rate hikes

New Straits Times - - Business -


THE Philip­pines Cen­tral Bank deputy gover­nor Diwa Guini­gundo said he sees no need to ad­just mon­e­tary pol­icy be­cause con­cerns about over­heat­ing are not war­ranted and con­sumer prices are ex­pected to rise at a steady rate.

The cen­tral bank’s three per cent pol­icy rate might seem low, but pol­icy set­tings were ap­pro­pri­ate given that in­fla­tion was fore­cast to slow slightly from next year, said Guini­gundo.

The cen­tral bank was also pre­pared to let the peso “ad­just” ver­sus the US dol­lar in re­sponse to United States Fed­eral Re­serve rate hikes, be­cause the risk of cap­i­tal flight was low and a weaker peso had less im­pact on in­fla­tion now than pre­vi­ously, he said.

“We are in a Goldilocks sit­u­a­tion in the sense that we have high growth and low and sta­ble in­fla­tion,” said Guini­gundo on the side­lines of an Asian De­vel­op­ment Bank meet­ing, here, yes­ter­day.

“Fears about over­heat­ing are not well placed. We don’t see the ur­gent need to start tweak­ing the pol­icy rate or ad­just­ing other levers of mon­e­tary pol­icy.”

The cen­tral bank will meet on Thurs­day to re­view pol­icy. It has kept its main pol­icy rate un­changed since Septem­ber 2014.

Guini­gundo is a can­di­date to be­come the next cen­tral bank gover­nor once Amando Te­tangco, the cur­rent gover­nor, steps down in July.

Guini­gundo yes­ter­day re­it­er­ated his in­ter­est in the role, but said it was up to Pres­i­dent Ro­drigo Duterte to de­cide.

The Philip­pines is among the world’s fastest grow­ing economies, with gross do­mes­tic prod­uct ex­pand­ing by 6.8 per cent last year, a three-year high.

The an­nual rate of con­sumer price in­fla­tion was un­changed at 3.4 per cent last month. Reuters


The Philip­pines Cen­tral Bank is pre­pared to let the peso ‘ad­just’ ver­sus the US dol­lar in re­sponse to Fed­eral Re­serve rate hikes, says Deputy Gover­nor Diwa Guini­gundo.

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