BSP says will not hesitate to make preemptive adjustments

Posted at 05/06/2014 11:46 AM

MANILA - The Bangko Sentral ng Pilipinas (BSP) is ready to adjust its monetary policy if it sees its inflation target at risk or financial stability issues arise from strong liquidity growth, its governor said on Tuesday, ahead of a policy meeting this week.

"We will not hesitate to make preemptive adjustments to any of our policy levers in measured pace if the inflation target would be at risk or financial stability pressure heightens," Governor Amando Tetangco said.

Data published earlier on Tuesday showed annual inflation was slightly faster than expected in April at 4.1 percent due to higher food and utility costs, but the data came within the central bank's forecast range of 3.6 to 4.5 percent.

Monetary authorities were also monitoring the impact of a one-percentage-point increase in banks' reserve requirements which took effect only in the middle of April and global developments that could affect domestic inflation, Tetangco said in a mobile text message to reporters.

The central bank next meets to review monetary policy on Thursday.

Thirteen of 15 economists in a Reuters poll expect the monetary authority to keep its overnight borrowing rate steady at a record low of 3.5 percent, while two forecast a 25-basis-point (bps) hike.