The Philippines: BSP may withdraw support only if there are ‘indisputable’ signs of economic recovery

  • THE CENTRAL BANK will only withdraw monetary support once it sees “indisputable” signs of economic recovery, its governor said.
  • Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the timing for the unwinding of its support measures is crucial, adding the central bank will “carry out a disengagement strategy in a way that avoids risks associated with early or late implementation.”
  • “We recognize that economic recovery is still in its nascent phase. As such, we will keep our monetary policy supportive of growth and allow previous monetary easing to work its way through the economy,” Mr. Diokno said.
  • Mr. Diokno had earlier said they will only consider rate adjustments when economic recovery becomes more sustainable, which he expects to happen around 2H22.
  • “When it comes to exit strategy, the BSP recognizes the necessity of carefully balancing the need to ensure sustainability of recovery and the need to guard against risks to the BSP’s price and financial stability objectives,” Mr. Diokno said.
  • He said that while the BSP has purchased government securities in the secondary market to boost market confidence, the activity “has been scaled down as the economy recovers.”

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