BSP 'not so concerned' about Omicron variant

MANILA, Philippines — The Bangko Sentral ng Pilipinas downplayed any threats posed by the Omicron variant on the local financial system amid a pick-up in vaccination rates, which is crucial in averting another harsh lockdown that could mess up economic recovery.

In an afternoon briefing with reporters on Thursday, BSP Governor Benjamin Diokno said there’s “too much exaggeration” with the new virus variant, first detected by South African scientists. 

“We will continue our accommodative monetary policy. We are not so concerned with the new virus, or the new variant rather,” Diokno said. “The best thing to do is vaccinate, vaccinate, vaccinate.”

Details about the Omicron variant are still hazy, as scientific experts still need time to assess the potency of this variant that contained 19 different mutations. But the World Health Organization dubbed it a “variant of concern” while some experts believe the heavily mutated version of coronavirus could evade existing vaccines to some degree, sending global equity markets seesawing in the past week. 

The Philippine Stock Exchange was not spared from the volatility, with the main index posting one of its biggest losses this year on Wednesday to sink below the 7,000-territory. Local equities recovered on Thursday after investors went bargain hunting.

If anything, the emergence of Omicron shows the economy is not out of the woods yet. But some economists believe the Philippines may withstand any disruptions from the new variant, citing the forecast-beating growth in the third quarter despite the onslaught of the Delta variant.

In the past, the BSP had shown a willingness to swiftly react, especially when the health crisis called for much-needed support. Last year, the central bank slashed its benchmark interest rate to 2% after an aggressive easing episode in a bid to spur credit growth within the country’s economic and financial system. That accommodative monetary policy stance came to fruition when bank lending finally broke eight straight months of contraction in August and sustained that growth in October.