‘MONETARY POLICY UNLIKELY TO CHANGE’
Philippine central bank says will also let peso ‘adjust’ versus US dollar in response to Fed rate hikes
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.