BSP to maintain accommodative policy stance as economic recovery won’t be easy

The Bangko Sentral ng Pilipinas (BSP) will maintain its accommodative policy stance for as long as necessary as the country’s economic recovery will not be easy, Governor Benjamin Diokno said.

According to Diokno, the accommodative policy stance will sustain economic recovery and support the “whole-of-government approach” in recovering from COVID-19.

“The Philippines has sustained its position compared with rating peers because of the strengthening of its fiscal metrics ahead of the pandemic shock. Nevertheless, the country’s road to recovery will not be easy,” he said in an emailed statement.

“We will continue to monitor recent developments, here and abroad, and assess their impact on the inflation outlook, financial stability, and growth,” he added.

The central bank in its latest policy meeting in June decided to keep policy rates at record lows—overnight reverse repurchase facility at 2.00%, overnight deposit at 1.5%, and overnight lending facility at 2.5%.

Diokno noted that the BSP will continue to maintain price stability and bolster the financial sector by strengthening resilience against external shocks.

The BSP in July approved to loan out another P540 billion to the Philippine government to be used as budgetary support as the country faces a fiscal deficit due to the COVID-19 pandemic.

Prior to this, the BSP already earlier approved two loans worth P540 billion each to the national government—one in December 2020, and another in October last year.

The central bank also lent out some P300 billion to the government through the form of securities in March 2020.

“Looking ahead, the BSP is committed to support the economy for as long as needed to ensure its strong and sustainable recovery,” Diokno said.

“The BSP will also remain vigilant against any emerging risks to the outlook for inflation and growth and will adjust its policy settings as needed to safeguard its price and financial stability objectives,” he added.—AOL, GMA News