SUBIC BAY FREEPORT, Philippines— The current state of monetary policy remains appropriate to support growth and manage inflation, a central bank official said over the weekend.
“Monetary policy remains appropriate as it is. We have not seen any tightness in the monetary condition and trading continues to grow. It has not been an impediment to financing economic activity,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said during the BSP’s annual media seminar held here.
The Monetary Board (MB), BSP’s policy making body, has cut twice its key rates down to their record-lows this year, putting overnight borrowing rate at four percent and overnight lending rate, six percent. It has also lowered the amount banks must keep as reserve to 19 percent from 21 percent.
Inflation slowed further in June to 2.8 percent from 2.9 percent in May, resulting in a year-to-date figure of three percent, which is at the lower-end of the BSP’s three-five percent target for the year. The central bank sees inflation settling at 3.1 percent this year.
The Philippine economy, meanwhile, posted a faster-than-expected 6.4 percent growth in the first quarter on the back of higher exports and public spending. The government has a five-six percent growth target for the year.
Guinigundo said the peso remains “broadly competitive” despite reaching as high as 41.61 to a dollar on Thursday last week, a four-year high.
- By Prinz P. Magtulis