No need to follow foreign bank moves – Espenilla

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said the country’s monetary policy setting is not tied with that of central banks in advanced economies particularly the US.

“Our monetary policy is independent of what the US Fed does. We’re not obliged to follow since we don’t have a fixed exchange rate,” BSP Governor Nestor Espenilla said.

BSP does not need to move in synch with the decision of monetary authorities in other countries as the Monetary Board focuses on inflation outlook relative to the target, according to Espenilla.

“But our monetary policy is not tied to it. That’s primarily driven by the domestic inflation outlook relative to our targets,” Espenilla said.

A number of US Fed policymakers signaled in their latest meeting that they are ready to lift rates next month after raising rates in March and June.

The next rate-setting meeting of the Monetary Board is scheduled on Dec. 14. It is the last and sixth meeting of the policy setting body of the central bank for the year.

Espenilla said the BSP is focused on promoting price and financial stability conducive to a balanced and sustainable economic growth. “Our monetary policy is independently focused on meeting our inflation target,” he said.

The BSP expects inflation to settle at two to four percent between 2017 and 2020.

The benign inflation environment and robust domestic demand have allowed the Monetary Board to keep an accommodative stance, keeping interest rates steady over the past three years. It last raised benchmark rates in September 2014.