^

Business

BSP eyes other tools vs external risks: Tetangco says rate adjustments may not be the best response

Kathleen A. Martin - The Philippine Star

MANILA, Philippines - The Bangko Sentral ng Pilipinas hinted yesterday it may deploy other financial instruments to counter external risks.

BSP Governor Amando M. Tetangco Jr. said the central bank is mindful of the potential risks to financial stability as investors around the world rebalance their portfolios searching for better yields.

“But at the same time, we are also cognizant that policy rate adjustments may not necessarily be the best tool to address any brewing financial stability pressures, especially at a time when the inflation outlook remains well-anchored as it is for the Philippines right now,” Tetangco said.

“The BSP will continue to monitor global and domestic developments to assess which of the instruments in our tool kit would be most effective should these pressures become persistent,” he said.

The central bank last month kept the overnight borrowing and overnight lending rates steady as inflation expectations fell within the target ranges for this year and the next.

The BSP has left the key policy rates unchanged for the third consecutive rate-setting meeting in February. It will revisit policy settings again on March 26.

“The negative yields in the short-end of the Eur (euro) curve have pushed investors to the long end of the Eur yield curve, as well as the long-dated bonds of economies with good growth prospects, including the US and EMEs (emerging markets and economies),” Tetangco said.

The central bank last adjusted key policy rates in the third quarter of last year, increasing them by a total of 50 basis points to anchor inflation expectations. The reserve requirement ratios and the Special Deposit Account rate were also hiked in early 2014 to bring down excessive liquidity growth.

BANGKO SENTRAL

BANK

BSP

EUR

GOVERNOR AMANDO M

PILIPINAS

POLICY

SPECIAL DEPOSIT ACCOUNT

TETANGCO

TETANGCO JR.

  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with