Tetangco sees US rate hike this year

Bangko Sentral ng Pilipinas ( BSP) Governor Amando M. Tetangco Jr. yesterday commented that the US Federal Reserve’s most recent tone is decidedly “dovish,” a sign of a loosening of monetary stance.

“Markets remain cautious,” said Tetangco. “Overnight, the markets generally viewed the Fed move as dovish, in that while it paved the way for a hike, it lowered its forecast for benchmark rates.”

Fed chief Janet Yellen is clearer on the US central bank’s interest rates’ increase this year, but said it will not happen soon and perhaps make that move towards the latter part of 2015. The markets viewed this as the first clear signal to hiking US benchmark rates since 2006. (Related story on B-6)

Tetangco said that the local central bank has time to keep current monetary policy stance, or keep it unchanged for “most” of this year.

In a text message yesterday, Tetangco remarked: “We continue to be watchful of shifts in market sentiment, as more data is released to confirm the underlying strength of the global economy.”

“We will see how these would affect fect domestic inflation dynamics (and) we will make adjustments to stance of policy y as appropriate,” Tetangco added.

The BSP chief also commented that while the peso is reacting to other markets’kets’ reactions to the US Fed pronouncements,ments, the local currency is moving where otherther currencies in the region are. “The peso so has moved in line with the region,” he e reiterated.

The BSP’s Monetary Board is meeting next Thursday, March 26, to discuss its