The latest forward guidance of the Bangko Sentral ng Pilipinas (BSP) reflects a commitment towards preserving adequate policy support for as long as necessary to ensure the sustainability of economic recovery.
“The emerging outlook of a manageable inflation and nascent growth allows the BSP to maintain its accommodative monetary policy stance to help strengthen domestic demand and support business and consumer confidence, thereby facilitating the growth momentum to gain further traction in the coming months,” said BSP Governor Benjamin E. Diokno.
Forward guidance refers to statements on the likely future path of monetary policy based on the latest economic data and assessment.
“The Philippine economy is also well-placed to weather an environment of tighter global financial conditions in the event of US monetary tightening, given the economy’s macroeconomic fundamentals and the continued availability of policy space from authorities,” Diokno said.
The anticipated normalization in US monetary policy has led to some concerns regarding its financial market implications, particularly for emerging economies.
Nevertheless, Diokno said US monetary authorities have been providing appropriate signals to guide financial market expectations, allowing market participants to better price-in potential adjustments in US monetary conditions and avoid unnecessary and disruptive market reactions.
Against a backdrop of a more challenging global economic environment, Diokno said the BSP remains focused on preserving the appropriately supportive stance of monetary policy amid emerging risks to the recovery outlook, including the possible spillovers from external developments that may affect domestic inflation dynamics, capital flows, and the exchange rate.
“The BSP will continue to carefully communicate its future policy intentions to reduce uncertainty and foster a quicker and durable recovery,” Diokno said.
Meanwhile, the BSP is implementing a revised monetary penalty framework with an expanded coverage and which imposes higher penalties.
