NextGen Day

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) does not need to follow the Federal Reserve’s decision to raise interest rates, and its policy choice is based on statistics and domestic events.

“I’d like to reiterate that the BSP calibrates its monetary policy settings in response to external developments only to the extent that it will influence the outlook for growth and inflation,” BSP Governor Benjamin Diokno said in a virtual briefing aired on Thursday on the central bank’s Facebook page.

After its March 15-16 meeting, the Federal Open Market Committee (FOMC) raised the Fed’s benchmark rates by 0.25 percentage points to 0.25 to 0.50 percent.

This is the first-rate hike since December 2018, and it is intended to combat the rising US consumer price index (CPI), which reached 7.9% in February 2022, the highest annual rate in the last four decades.

The Monetary Board (MB) of the BSP, which sets policy, will meet on March 24 to determine interest rates.

During the meeting, Diokno, who chairs the MB, said they will examine their own inflation outlook, among other things.

He added that, in addition to policy rates, the BSP has a number of measures to deal with short-term volatility and prospective tightening of financial conditions.

The flexible exchange rate system, large external buffers, macroprudential policy framework, and liquidity-enhancing and management tools are all examples of these.

“However, to avoid unexpected repercussions associated with prolonged loose monetary conditions, our future monetary policy decisions will continue to be data-driven and based on emerging domestic events,” he added.

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