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Philippine central bank says ready to adjust policy if needed

[MANILA] The Philippine central bank expects the economy to remain resilient this year to both external and domestic risks, but is ready to act if needed to deal with risks, its governor said on Tuesday.

"We have the policy space to respond to uncertainties in the external and domestic environment," Bangko Sentral ng Pilipinas Governor Amando Tetangco said in a speech at the Manila Times 3rd Business Forum. "We will therefore make adjustments to the stance of policy as conditions warrant."

He said low oil prices, El Nino and infrastructure gaps are among the key domestic risks for one of Asia's fast-growing economies.

While low oil prices help keep inflation manageable, Mr Tetangco said the uneven global growth prospects and uncertainty in oil price movements have triggered global portfolio realignment, with emerging markets hit by strong fund outflows last year.

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The Philippine central bank kept its benchmark interest rate steady at 4.0 per cent at its last policy review on Feb. 11, where the rate has been since September 2014, while warning of a drag from the El Niño dry weather and financial market volatility ahead.

Mr Tetangco reiterated that the economy does not need additional stimulus at the moment. It could grow 6 per cent this year and 6.2 per cent next year, based on International Monetary Fund forecasts.

The external liquidity position continues to be robust, with the balance of payments expected to revert to a surplus later this year from a deficit of $813 million in January, he said.

The central bank is keeping its policy of allowing the exchange rate to be determined by market forces, but will act to limit excessive exchange rate movements, he said.

As financial markets are carefully watching China's next monetary policy moves, Mr Tetangco reiterated the need for "cohesive" actions from Chinese authorities. "I think what we need is greater clarity, greater communication of monetary policy," he added.

REUTERS

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