{"id":43349,"date":"2013-10-24T08:40:57","date_gmt":"2013-10-24T12:40:57","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=43349"},"modified":"2013-10-24T10:52:24","modified_gmt":"2013-10-24T14:52:24","slug":"philippines-maintains-rates-inflation-in-line-with-target","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/10\/24\/philippines-maintains-rates-inflation-in-line-with-target\/","title":{"rendered":"Philippines maintains rates, inflation in line with target"},"content":{"rendered":"

By www.CentralBankNews.info<\/u><\/a>     The Philippine central bank maintained its policy rates due to “a benign inflation environment” with inflation forecast to remain in line with the central bank’s target through 2015.
    The Central Bank of the Philippines (BSP) has held its policy rate steady at 3.50 percent since October 2012 and also maintained its other rates, including the overnight lending, or repurchase facility rate at 5.50 percent and the rates on its special deposit accounts (SDAs), which were cut in April to discourage the inflow of capital.
    “The Monetary Board noted that while global economic conditions remain challenging, prospects for domestic activity remain robust, supported by buoyant domestic demand and favorable consumer and business sentiment,” the BSP said.
    The Philippine inflation rate rose to 2.7 percent in September from 2.1 percent in August but the bank said the risk to inflation remains unchanged with most lending going to productive sectors of the economy, helping sustain the capacity of the economy to absorb and thus moderate price pressures.
    The bank said its latest forecast for inflation indicate that the path remains in line with the central bank’s 2013\/2014 target range of 4.0 percent, plus\/minus one percentage point, and the 2015 target range of 3.0 percent, plus\/minus one percentage point.
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     Gross Domestic Product in the Philippines rose by 1.4 percent in the second quarter from the first for annual growth of 7.5 percent, down from 7.7 percent.
     The decision to maintain rates was widely expected and economist expect rates to remain steady the rest of the year.<\/p>\n

    www.CentralBankNews.info<\/a>
 <\/p>\n

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BANGKO Sentral ng Pilipinas (BSP) officials and several market players expect another \u201cno-change Thursday\u201d in the central bank\u2019s upcoming policy meeting this week, as the country\u2019s inflation remains on the lower end of the government\u2019s target range.<\/div>\n
The BSP, the Philippines\u2019s monetary authority, has been maintaining its key policy rates on hold for three consecutive monetary-policy meetings. The Monetary Board (MB) meets every six weeks to discuss and fine-tune, if needed, the country\u2019s policy rates to support price stability and economic growth. The last time the central bank made an adjustment was on April 25 this year, when the last cut to the special deposit account (SDA) facility was made.<\/div>\n
On Thursday, October 24, the MB will meet to assess global and domestic economic developments that may have affected the Philippine economic landscape and adjust policy settings, if deemed necessary, to better ride out these developments. An unchanged policy stance means these policy settings in place are still appropriate, given the current global and domestic economic backdrop.<\/div>\n
Lead economists from the top banks in the country forecast that the BSP would keep its policy rates steady in its next policy meeting, as well as for the rest of the year.<\/div>\n
In separate interviews, Banco de Oro (BDO) Chief Market Strategist Jonathan Ravelas, Bank of the Philippine Islands (BPI) Lead Economist Emilio Neri Jr., First Metro Investment Corp. (FMIC) Treasury Group Senior Vice President Reynaldo Montalbo Jr. and Security Bank Economist Patrick Ella were all in consensus that the BSP would keep its key policy rates, and is only seen to adjust them in the first quarter of next year.<\/div>\n
All the economists polled cited the benign inflation for the first nine months of the year as the main reason the BSP would keep its rates steady.<\/div>\n
\u201cIn keeping the policy rates, the BSP must be considering that inflation has remained benign and will most likely be within their target for the year,\u201d FMIC\u2019s Montalbo said.<\/div>\n
The country\u2019s inflation rate hit 2.7 percent in September after sinking to a four-year low in August. Average inflation for January to September this year is at 2.8 percent, still slightly below the government\u2019s target of 3 percent to 5 percent for this year and for the next.<\/div>\n
\u201cFor one thing, the lack of demand-driven inflation pressures [is a major consideration in the policy stance]. So far, the only factor ticking up inflation has been the recent weather disturbances in August, September and early this month, which should see inflation inch up to 3 percent,\u201d Security Bank\u2019s Ella said.<\/div>\n
\u201cWhile headline inflation is probably accelerating at a much faster pace than the BSP has anticipated, the full year 2013 inflation will still well within the BSP target. Inflation is not rising fast enough to breach the BSP\u2019s 2014 target either to justify any tightening move next Thursday,\u201d BPI\u2019s Neri said.<\/div>\n
In terms of global developments, FMIC said the MB would also consider the situation of the US debt issues and the timing of its asset purchase program tapering in coming up with a policy stance.<\/div>\n
\u201cAlso, they will be waiting for the US situation to clear up on the pace of the tapering of quantitative easing and the next battle between the White House and Congress in January and February 2014,\u201d FMIC\u2019s Montalbo added.<\/div>\n
Felipe Medalla, a member of the Monetary Board, also said he sees no reason to adjust policy settings this year as inflation remains to be benign.<\/div>\n
Medalla and the economists forecast a change in the policy stance in the first quarter next year, after global and domestic developments have already transcribed and have already been assessed by the BSP.<\/div>\n
\u201cBy that time inflation would have adjusted and we can know more of the decision of the Federal Reserve regarding their bond purchase, if indeed they will pursue a tapering,\u201d Security Bank\u2019s Ella said. \u201cIn fact, tapering at this point\u2014fresh from a government shutdown and tense debt-ceiling negotiations in the US\u2014has indeed impacted both business and consumer confidence of Americans. Hence, the US Fed will take a few months to reassess if tapering is warranted and late first quarter of 2014 is a likely period for some movement on this issue.\u201d<\/div>\n
However, for BPI\u2019s Neri, the current monetary policy would still be appropriate for the entire year next year if the BSP revised its 2015 inflation target.<\/div>\n
\u201cWe are concerned that the 2015 target is too low 2 percent to 4 percent and needs to be revised to avoid significant financial market instability by mid- to late-2014. Our recommendation to the BSP that the 2015 inflation target be reset to 3 percent to 5 percent could help avoid the potentially destabilizing impact of abrupt policy adjustments to meet a somewhat unrealistic target,\u201d Neri said.<\/div>\n
oct 3, bbg, The Philippines will withstand pressure stemming from the impending reduction of the Federal Reserve\u2019s stimulus with growth exceeding 7 percent this year, central bank Governor Amando Tetangco said.<\/div>\n
Bangko Sentral ng Pilipinas will probably keep interest rates steady this year and next, \u201cbarring any unforeseen shocks,\u201d Tetangco, 60, said in an interview in his office in Manila yesterday. Inflation will fall within the central bank\u2019s target range for a fifth year this year, he said.<\/div>\n
The Asian Development Bank yesterday raised its gross domestic product growth estimate for the Philippines this year to 7 percent, while cutting its prediction for developing Asia. Slowing growth in China and India is compounded by concern that the unwinding of the Fed stimulus will drive investors away from emerging nations and spur volatility in financial markets.<\/div>\n
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\u201cWhat we have observed is that the impact on us has mainly been in terms of greater financial market volatility,\u201d Tetangco said. \u201cThe economy hasn\u2019t been affected much. Domestic demand is the real driver. We\u2019re less dependent on the performance of other countries or the rest of the world, unlike our neighbors.\u201d<\/div>\n
The peso climbed 0.7 percent, the most in Southeast Asia today after the Malaysian ringgit. The Philippine Stock Exchange Index (PCOMP) added 0.4 percent to 6,387.65 at the close in Manila, the highest since Sept. 26.<\/div>\n

Benign Inflation<\/h2>\n
Inflation eased to a four-year low in August, with consumer prices rising 2.1 percent from a year earlier.<\/div>\n
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Policy makers have held the benchmark interest rate at a record-low 3.5 percent since cutting it a year ago. The central bank targets consumer price gains to average 3 percent to 5 percent in 2013 and 2014.<\/div>\n
Philippine GDP (PHGDPYOY) rose 7.5 percent in the second quarter from a year earlier, matching China\u2019s pace and higher than the government target of 6 percent to 7 percent for the year. President Benigno Aquino yesterday said the nation can achieve 7 percent economic growth this year.<\/div>\n
\u201cIt\u2019s likely the 7 percent upper end of the government target will be exceeded,\u201d Tetangco said.<\/div>\n
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The government\u2019s growth forecast for next year is 6.5 percent to 7.5 percent, said Tetangco, who began working at the central bank in 1974 as a statistician at the economic research department and rose to governor in 2005.<\/div>\n

Fed Tapering<\/h2>\n
The Philippines is well-placed to withstand any volatility, with its current-account surplus and high foreign exchange reserves, the Asian Development Bank said yesterday. Authorities will need to keep a close eye on credit conditions, with a possibility that the central bank will tighten monetary policy next year, the ADB said.<\/div>\n
The country will be able to \u201cadjust smoothly\u201d to an eventual tapering of bond purchases by the Fed, the International Monetary Fund said last month.<\/div>\n
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Central bank Deputy Governor Diwa Guinigundo said last month that the nation is prepared for a possible tapering of the Fed\u2019s record stimulus with policy measures to deal with capital outflows. The measures may include boosting dollar and peso liquidity, careful surveillance of risk, use of forward guidance, tapping currency-swap agreements, and possible tightening of monetary policy, he said.<\/div>\n
CIMB Group Holdings Bhd. (CIMB) Chief Executive Officer Nazir Razak said investors are starting to differentiate Asia\u2019s emerging markets after the sell-down in the past two months on concerns of the Fed\u2019s tapering.<\/div>\n

Eventual Tapering<\/h2>\n
\u201cFor the near-term, we\u2019re probably going to see a little bit of upturn in the regional markets,\u201d Nazir, whose bank led Southeast Asia\u2019s stock and bond sales by volume this year, said in response to questions after a speech in Singapore yesterday. \u201cBut in the long-term, one needs to prepare for the eventuality of tapering.\u201d<\/div>\n
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In the Philippines, Aquino is raising spending to a record this year and seeking more than $17 billion of investment in roads and airports. Fitch Ratings and Standard and Poor\u2019s awarded the Philippines its first investment-grade scores earlier this year. Moody\u2019s Investors Service upgraded its rating on the Philippines today, completing the country\u2019s ascent to an investment rank.<\/div>\n
\u201cWe have room to continue to support the economy given the benign inflation,\u201d Tetangco said in the interview. \u201cThus we\u2019ve been able to maintain interest rates at historically low levels without fanning inflation.<\/div>\n

BSP seen keeping interest rates low<\/h1>\n

Monetary agency monitoring 3 major risks<\/h4>\n

<\/span><\/span>By<\/a> <\/span>Paolo G. Montecillo<\/a>
Philippine Daily Inquirer<\/a><\/span><\/p>\n

7:18 pm | Sunday, September 29th, 2013<\/span><\/div>\n
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<\/span> <\/span>6<\/span><\/span><\/span><\/span><\/span><\/span> <\/span>57<\/span><\/span><\/span><\/span><\/span><\/span> <\/span>21<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/div>\n<\/div>\n

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BSP Governor Amando M. Tetangco Jr. FILE PHOTO<\/div>\n<\/div>\n
<\/div>\n
The Bangko Sentral ng Pilipinas (BSP) will likely keep interest rates at record lows until yearend, barring any surprises that may lead to instability in consumer prices or weaker economic growth.<\/div>\n
BSP Governor Amando M. Tetangco Jr., however, stressed that the policymaking Monetary Board has enough tools in its arsenal to counter any external forces that may threaten to knock the localeconomy<\/span><\/span><\/a> off its stable footing.<\/div>\n
\u201cBarring any unforeseen threats, I think we have room to keep policy rates steady for the balance of the year,\u201d Tetangco told financial<\/span><\/span><\/a> market players this week. \u201cShould market reaction\/sentiment lead to a loss of overall business confidence or a dis-anchoring of inflation expectations, the BSP has the room to adjust policy interest rates or other monetary policy tools, as appropriate.\u201d<\/div>\n
Tetangco was speaking at a closed-door joint assembly of the Fund Managers Association of the Philippines (FMAP), the  National Association of Securities Broker Salesmen Inc. (NASBI), Trust Officers Association of the Philippines (TOAP), the Investment House<\/span><\/span><\/a> Association of the Philippines, the Money Market Association of the Philippines and the Association Cambiste Internationale (ACI)-Philippines.<\/div>\n
The BSP\u2019s benchmark overnight borrowing and lending rates stand at record lows of 3.5 and 5.5 percent, respectively.<\/div>\n
In his speech, Tetangco noted three major risks to the BSP\u2019s monetary policy settings, namely, the uncertainty of easy<\/span><\/span><\/a> money policies in the United States, high liquidity growth locally and economic conditions overseas.<\/div>\n
He said the schedule of the US Federal Reserve\u2019s tapering of its bond-buying program could lead to one of two situations: Excessive exuberance that could inflate asset prices or disappointment that could bring prices crashing.<\/div>\n
Tetangco said the BSP would respond by further tweaking existing macroprudential measures or release new ones, as appropriate to target problem asset areas.<\/div>\n
Meanwhile, he said market players need not be concerned over what seems to be excess liquidity entering the system as funds from the central bank\u2019s Special Deposit Accounts (SDA) are released following restrictions on individual investors parking their funds in facility.<\/div>\n
Tetangco pointed out that investors who used to put their funds in SDAs usually have low-risk appetites. Hence, once these funds exit SDAs, these would likely be diverted to other low-risk asset classes\u2014reducing the possibility of the formation of asset bubbles.<\/div>\n
Tetangco said the most uncertain risk the country faced were economic conditions in major trading partners that might affect growth locally.<\/div>\n
Apart from the country\u2019s trade ties with Europe, China and Japan, the Philippines may also see a slowdown in growth in remittances from migrant workers based in those markets as well as fewer international tourists.<\/div>\n
Tetangco said that at the moment, the consensus was that Europe could possibly keep its growth rate stable, Japan would calibrate its stimulus, learning from the experience of the Fed on the problems of exit from unconventional monetary policy<\/span><\/span><\/a>, and China would continue to grow at a steadier pace.<\/div>\n
\u201cWe are monitoring these economies, but we are also mindful that our own domestic demand conditions, particularly consumption and capital formation, remain quite strong,\u201d Tetangco said.<\/div>\n<\/div>\n
\n
ept 21<\/span> | Sat Sep 21, 2013 4:31am EDT<\/span><\/div>\n<\/div>\n

<\/span><\/p>\n

(Reuters) – The Philippine central bank is seeking a a capital increase of 150 billion pesos ($3.5 billion) as an additional buffer for warding off increasing risks locally and globally, a move that is part of Manila’s priority legislation, a senior official said on Saturday.<\/span><\/div>\n

<\/span><\/span><\/p>\n

The Bangko Sentral ng Pilipinas (BSP) also asked for tax exemptions to further boost its finances in the bill submitted to Congress this week, said Vicente Aquino, deputy BSP governor for resource management, as the monetary authority continued to post losses for more than three years running.<\/div>\n

<\/span><\/p>\n

“What image will the Philippines have if the BSP is financially weak? It will not be able to perform its constitutional and legal mandate to promote price stability,” Aquino told reporters, adding the capital hike will enhance the central bank’s administrative and fiscal autonomy.<\/div>\n

<\/span><\/p>\n

The BSP recorded a net loss of 19.2 billion pesos in the first half, substantially narrower than a net loss of nearly 50 billion pesos in the same period a year earlier, after it introduced measures aimed at narrowing access to its short-term special deposit account (SDA) facility that attracted huge funds and contributed to its financial losses.<\/div>\n

<\/span><\/p>\n

As of end August, money parked with the central bank’s SDA window was 1.6 trillion pesos, down from a record 1.98 trillion pesos posted in mid-April.<\/div>\n

<\/span><\/p>\n

Aquino said the BSP was seeking a tax exemption to preserve its capital and allow it to pay higherdividends<\/a><\/span> to the government, adding central banks<\/a><\/span> in other countries were tax exempt.<\/div>\n

<\/span><\/p>\n

The central bank was given an initial 50-billion-peso capital after its 1993 reorganisation from the old, debt-laden Central Bank of the Philippines, but the government still has to deliver the remaining remaining balance of 10 billion pesos to complete the amount.<\/div>\n

<\/span><\/p>\n

The government gave an initial 10 billion pesos to the BSP upon its 1993 creation, with the second capital infusion of the same amount coming only 18 years after or in 2011.<\/div>\n

<\/span><\/p>\n

In December last year, the government infused another 20 billion pesos, as the BSP posted a record net loss of 95.4 billion pesos in 2012, its third straight year of being in the red. ($1 = 43.05 Philippine pesos) (Reporting by Rosemarie Francisco; Editing by Ron <\/div>\n
sep 20<\/div>\n
MANILA \u2013 Expect key Philippine interest rates to stay where they are \u2013 at record lows, that is \u2013 after the US Federal Reserve decided to retain its economic stimulus, a top Bangko Sentral ng Pilipinas (BSP) official said today.<\/div>\n
\u201cIf you have monetary and fiscal space — the Philippines is one of them, for example — then emerging markets can simply maintain where they are right now,\u201d BSP Deputy Governor Diwa C. Guinigundo said on the sidelines of the central bank\u2019s briefing on the country\u2019s second-quarter balance of payments (BOP) account.<\/div>\n
The BSP has kept its policy rates at record lows of 3.5 percent and 5.5 percent for the overnight borrowing and lending windows since the start of the year. The yields on its special deposit accounts likewise are at a record low of two percent across the board.<\/div>\n
Guinigundo said a \u201creflow of capital can take place as the market continues to consolidate its views about the recent decision of the US Fed.\u201d<\/div>\n
\u201cThe regime of interest rates will continue in the US. The investors can rethink their portfolio choices and start reconsidering going back to emerging markets including the Philippines. That means that easing of risk aversion against [emerging markets] will probably result in the reassessment of macroeconomic fundamentals of [emerging markets], including the Philippines,\u201d he said.<\/div>\n
And in this reassessment, the Philippines stands out as its macroeconomic fundamentals remain sound and strong, Guinigundo said, adding that, \u201cWe are growing and the price pressures are very limited.\u201d<\/div>\n
The Philippine economy grew 7.6 percent in the first half of the year, while consumer price increases averaged 2.8 percent in the first eight months, or well below the BSP\u2019s target range of 3-5 percent for the entire 2013.<\/div>\n
Guinigundo said the BOP<\/a> \u2013 a summary of the country\u2019s economic transactions with the rest of the world — remains in surplus at $3.359 billion in the first eight months of this year. A surplus means the country earned more dollars than it gave up, thus helping build up its dollar reserve, a buffer against financial shocks.<\/div>\n
Guinigundo also cited the Philippines\u2019 improving \u201cdebt dynamics,\u201d referring to the country\u2019s foreign debt as a percentage of the economy. This is measured using the external debt-to-GDP ratio, which has dropped to 18.3 percent last June from 21.8 percent in the same month last year.<\/div>\n
This ratio has gone down since 2003, thus posing less of a burden for the Philippines when times get tough. GDP or gross domestic product refers to the amount of final goods and services produced in the country, and as such is a measure of economic performance.<\/div>\n
Having said the above, Guinigundo said the US Fed decision to put off the end to its stimulus only allows other countries \u201cwith little space to sustain recovery\u201d to buy time.<\/div>\n
\u201cThe uncertainty remains because the actual timing of tapering has been postponed in a few more months,\u201d he said.<\/div>\n
\u201cWe should also emphasize the fact that the US Fed maintained its forward guidance of the possibility of a tapering of quantitative measures in the future. And a possible start of rate increase in late 2015,” he added.<\/div>\n

<\/p>\n

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sept 17 ONETARY authorities are prepared to adjust policy settings and deploy new measures to address risks to the economy, the Bangko Sentral ng Pilipinas (BSP) chief yesterday said.<\/h4>\n
\n
<\/div>\n<\/div>\n<\/div>\n
  \u201cThe BSP stands ready to make refinements to existing macroprudential measures or deploy new ones as necessary,\u201d central bank Governor Amando M. Tetangco, Jr. said at a briefing on the economy.

Uncertainties over the timing and pace of a US Federal Reserve tapering have caused emerging markets to stumble. With the Fed expected to finally begin scaling back this week, markets are again expected to react.

\u201cOur approach is to use a set of measures to address the challenges we face particularly from significant flows of capital … that if not managed properly can lead to asset price bubbles,\u201d Mr. Tetangco explained.

The central bank\u2019s policy-setting Monetary Board last month kept overnight borrowing and lending rates at record lows of 3.5% and 5.5%. Special deposit account rates were also maintained at 2% across all tenors and inflation outlooks were adjusted downwards. — ARRG<\/b><\/div>\n","protected":false},"excerpt":{"rendered":"

By www.CentralBankNews.info     The Philippine central bank maintained its policy rates due to “a benign inflation environment” with inflation forecast to remain in line with the central bank’s target through 2015.    The Central Bank of the Philippines (BSP) has held its policy rate steady at 3.50 percent since October 2012 and also maintained … <\/p>\n

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