BSP chief throws playful jab at US Fed

MANILA, Philippines — Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. finally found a rate decision he could rib the US Federal Reserve about: the one where Manila moved while Washington stood pat.

“The Fed decides not to follow the BSP!” Remolona quipped on Facebook, sharing a Quartz article on the US central bank’s decision to keep interest rates steady in what was described as Jerome Powell’s last meeting as Fed chair.

The banter continued in the comments section, where one user warned that the Fed may “soon regret” its decision as the baton passes to Kevin Warsh, who could still surprise markets by moving toward rate hikes.

Remolona appeared to enjoy the speculation, giving the comment a like.

It was a rare moment of central banking humor, made funnier by the fact that the BSP is often seen as the one watching the Fed, not the other way around.

For emerging markets like the Philippines, every Fed signal tends to matter. A US rate hike can strengthen the dollar, pressure currencies and complicate the job of local monetary authorities.

This time, however, the BSP had already hiked its policy rate while the Fed opted to stay on hold. For once, it was the US Fed that appeared to be behind the curve.

On April 23, the Monetary Board raised the BSP’s key policy rate by 25 basis points to 4.5 percent, marking a pivot back to tightening as inflation risks worsened due to higher oil and other supply-side pressures.

Less than a week later, the Fed decided to stay put, keeping its benchmark rate at 3.5 to 3.75 percent despite deep divisions among officials.

So technically, Gov. Eli had a point.

The punchline, of course, came with a very Philippine plot twist: the peso still had other plans. The local currency has since weakened past the 61-per-dollar level, closing at a fresh record low of P61.567 to $1 on Wednesday.

In other words, the BSP hiked, the Fed held and the peso still chose violence.

Still, the governor’s post offered a lighter moment in an otherwise tense week for markets. Policymakers are trying to keep inflation expectations anchored, traders are watching every oil price move and importers are hedging like it is a contact sport.

For once, though, the BSP could say it was not following the Fed. Or maybe the Fed just missed the memo.