BSP PREFERS GRADUAL TO DRASTIC RATE ADJUSTMENT AMID HIGH LIQUIDITY

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The Bangko Sentral ng Pilipinas (BSP) on Tuesday hinted that it would rather act early and make a gradual adjustment in interest rates if the financial environment calls for it, than be forced to take drastic action later and hurt the economy. At the moment, the central bank’s policy stance continues to be appropriate despite its higher average inflation forecast for 2014, BSP Governor Amando Tetangco Jr. said. The central bank said in February that average inflation this year may settle at 4.25 percent, still within the government’s target range of 3 percent to 5 percent, but higher compared to the 3- percent full-year inflation rate recorded in 2013. At a press conference after the Philippine Economic Briefing held at the Philippine International Convention Center in Pasay City on Tuesday, Tetangco said that despite the within-target inflation projection, the monetary authority’s room for maintaining its policy rates is narrowing.

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