MANILA: The Philippine central bank can afford to leave its policy settings on hold for most of this year, and the timing and magnitude of any interest rate hike would not be determined by the US Federal Reserve's actions, its governor said on Monday. The Philippine central bank was tightening policy last year as inflation picked up, and its tone remained hawkish even as many countries around the world eased policy -- including Indonesia last week.
Economists in a poll in February predicted the central bank would resume raising interest rates as early as in the second half of the year, or in 2016, depending on when the Fed starts raising US levels.
"It does not have to be in sync with the Fed, neither should it be in the same magnitude as any change in the Fed," Governor Amando Tetangco told Reuters in an interview at the Bangko Sentral ng Pilipinas in Manila, adding the central bank will consider domestic conditions and inflation trends.
"We believe the stance of monetary policy remains appropriate right now," said the central bank chief. Tetangco said while the central bank considers foreign exchange rate movements when it reviews monetary policy, the peso's level was not the primary driver for a policy action.
The central bank kept its benchmark interest rate steady at 4.0 percent for the third straight meeting on Feb. 12, with inflation cooling and growth remaining strong. It next meets on March 26. With the economy rapidly expanding - the Philippines was the second fastest growing Asian economy behind China last year - and falling energy and commodity prices increasing consumers' spending power, deflation is not considered a threat.
This year, the Southeast Asian nation is aiming for growth of 7-8 percent backed by sustained strong consumption and a rebound in public spending, while China's growth is expected to slow to around 7 percent. Inflation is forecast to fall between 2-4 percent this year from 4.1 percent in 2014.
Tetangco said there were no signs of an asset bubble in the country's rapidly expanding property market, noting that while banks' property exposure continued to rise, their non-performing real estate loans were declining.
"We are not thinking of adding any new rule or tighter rules," Tetangco said, referring to regulations governing banks' property assets. He said latest results show universal and commercial banks were in a position "to withstand plausible shocks in their real estate exposure."
Comments
Comments are closed.