BSP sees no need to increase rates

The Bangko Sentral ng Pilipinas sees no need to tweak the country’s policy settings despite the decision of the US Federal Reserve to raise interest rates for the second time in three months.

BSP Governor Amando Tetangco Jr. said the announcement of the rate hike in the US after the two-day review conducted by the Federal Open Market Committee (FOMC) was in line with market expectations.

“At the moment, however, given the Fed action was as expected and inflation for now is seen to be well behaved, there appears to be no need to tweak policy settings,” he said in a text message.

The US Federal Reserve raised interest rates on Wednesday for the second time in three months, a move spurred by steady economic growth, strong job gains and confidence that inflation is rising based on central bank’s expectations.

The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to one percent marked a convincing step in the Fed’s effort to return monetary policy to a more normal footing.

Fed chair Janet Yellen pointed to growing faith in the economy’s trajectory.

The US Fed also stuck to its outlook for two additional rate increases this year and three more in 2018. The US central bank lifted rates once in 2016.

“The Fed ‘s move though widely expected still contained valuable market information, particularly the indication of continued gradual pace of next steps and the consequent market interpretation that the Fed is willing to let inflation overshoot,” Tetangco said.

The BSP chief pointed out monetary authorities would watch out for further developments on the trade side to see