WHILE it closely monitors policy moves by other central banks, the Bangko Sentral ng Pilipinas (BSP) said other factors such as oil prices and the impact of the El Niño on inflation are more important to setting monetary policy her in the Philippines.
“We watch developments in policy stances of other jurisdictions but don’t have to move in sync with other policy makers,” BSP Governor Amando Tetangco Jr. told reporters in a text message on Friday, in response to questions following the economic stimulus announced by the European Central Bank (ECB).
In a move described by ECB President Mario Draghi as “comprehensive,” the European Central Bank expanded its quantitative easing bond-buying program from €60 billion to €80 billion a month.
ECB also cut its main interest rate from 0.05 percent to zero percent and cut its bank deposit rate from minus 0.3 percent to minus 0.4 percent.
Philippine monetary authorities decided to keep key interest rates unchanged during their first policy meeting f or the year, noting that the economy did not need additional support for now amid continued global volatility.
The Monetary Board kept the central bank’s overnight borrowing and lending rates at 4 percent and 6 percent, respectively.
For this year, the central bank forecasts inflation to average 2.2 percent before inching up to 3.2 percent in 2017.
‘Medium term positive’
Tetangco took note of the reaction of financial markets to the ECB stimulus package, saying that the timing of the policy action and follow-up statements seemed to have stirred markets.
“But what may have received more attention from the markets was the information that the ECB may be nearing the end of easing cycle,” Tetangco added.
“To the extent these moves would translate to growth, these should be medium term positive for global growth and the markets, including the peso,” the BSP governor suggested.
On the last trading day of the week, the peso gained 8 centavos against the US dollar, closing at P46.62 from P46.70 the previous day.
It was the strongest finish for the peso in more than four months since October 26 last year, when the local currency strengthened to P46.54 to the dollar.
The peso opened at P46.77 to $1 at the Philippine Dealing System on Friday before trading between P46.60 and P46.79. Total transactions rose to P712 million from P676.8 million in the previous session.