BSP stands firm on monetary stance

As general elections draw near 

MANILA, Philippines - The country’s monetary policy stance remains appropriate amid external developments, the Bangko Sentral ng Pilipinas said yesterday.

In a text message, BSP Governor Amando Tetangco Jr. said the actions of the US Federal Reserve and the Bank of Japan were broadly in line with expectations.

The US Fed kept interest rates steady last Wednesday citing the improvement in labor market conditions even as growth in economic activity appeared to have slowed.

On the other hand, the Bank of Japan surprised markets by holding off additional stimulus despite the twin earthquakes this month.

It left unchanged the $988 billion bond purchase program, the 0.1 percent negative rate on a portion of the cash banks park, and the program to buy riskier assets including assets.

“That should help clear up global market positioning in the very near term,” Tetangco said.

Tetangco said the BSP does not see significant shift in economic policies after President Aquino steps down on June 30.

“For our local markets we await the conduct of our national elections, although we don’t foresee significant changes in economic policy thrusts.  

At the moment, we really don’t expect any major developments cropping up that would necessitate a shift in our stance of policy,” he said.

The next rate-setting meeting of the BSP is scheduled on May 12.

Last March 23, monetary authorities kept interest rates unchanged amid the benign inflation environment as well as robust domestic demand.

Monetary authorities said domestic demand conditions continue to be buoyant supported by “solid private consumption and capital spending, positive business sentiment, and adequate credit and domestic liquidity.”

However, the Monetary Board also recognized the uncertainty over economic growth prospects across the globe could continue to drive volatility in the global financial markets in the months ahead.

“The Monetary Board also noted that the risks surrounding the inflation outlook have remained tilted to the downside, as downward price pressures could arise from the slower-than-expected global economic activity and potential second-round effects from lower international oil prices,” Tetangco said earlier.