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By Maricel E. Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP) said it would continue to
exercise flexibility in its monetary stance with the expected
slowdown in the global economy next year.
In its third quarter inflation report, the BSP
said the impact of the US financial crisis on the domestic economy
would be addressed with stable inflation and flexibility in its
monetary stance.
“With the global financial crisis and
prospects of a marked slowdown in global economic growth in 2009,
mo-netary policy will continue to be geared towards the achievement
of price stability while exercising flexibility given the presence
of significant shocks to the real sector,” the central bank said.
Besides price stability, the BSP would continue
to promote financial market stability to ensure its interest
rate-setting policy would remain effective.
“The BSP is firm in its resolve to undertake
policy actions that will ensure soundness and the stability of the
banking sector and to strengthen the public’s trust and confidence
in the financial system, by making sure there is sufficient
liquidity to fund the growth requirements of the economy,” it
said.
It projected the Philippine economy to sustain a
4-percent growth this year and next year despite the global economic
slowdown, Cyd Amador, BSP deputy director, earlier said.
Besides lower inflation, Amador attributed the
likely growth to public investments, government intervention,
earnings from business process outsourcing (BPO) services, tourism
and mining sectors.
Amador said inflation is expected to decelerate
rapidly after peaking in September at 12.5 percent.
Because of this, inflation will settle below the
BSP’s forecast of 9 percent to 11 percent this year and 6 percent
and 8 percent next year, she said.
Year-to-date inflation reached 12.2 percent, as
a result mainly of higher food prices which grew 17.1 percent.
Despite declining inflation, the Monetary Board
has maintained its key policy rates in its last meeting on October
6.
The BSP said a steady monetary policy will be
helpful in preventing any credit crunch. The policy-making Monetary
Board is set to meet on November 20. Its overnight borrowing and
lending rates stand at 6 percent and 8 percent, respectively.
Besides its interest-rate policy, the Monetary
Board has instituted measures to mitigate the impact of the widening
global credit crunch on the local economy. In recent weeks, it has
allowed financial institutions to reclassify financial assets from
categories measured at fair value, to those measured at amortized
cost, helping them trim their losses due to the persistent
volatility in asset prices.
The BSP also allowed banks to exclude net
unrealized losses in the calculation of the asset cover requirement
of their foreign currency deposit units (FCDU).
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