Strong capital flows a 'near-term concern': BSP

Posted at 07/18/12 1:43 PM

MANILA, Philippines - Bangko Sentral ng Pilipinas Governor Amando Tetangco said on Wednesday strong capital flows were a near-term concern, although the central bank has sufficient tools to manage the impact of fund movements on the economy.

Developments in the United States, one of the Philippines' largest trading partners, as well as the impact of tighter rules on a short-term deposit window which has attracted as much as $3.8 billion in funds, would be part of discussions when the central bank meets next week to set policy, Tetangco said in a text message to reporters.

"Just like the Fed, we have several options in our tool kit that we can employ. But our perspectives are different. For the Fed, it is to counter weak labor markets. For us, strong capital flows in the face of manageable inflation is a more near term concern," Tetangco said after Federal Reserve Chairman Ben Bernanke said the U.S. central bank was prepared to take further action if needed. 

Most economists expect the central bank to keep policy rates on hold at record lows at its July 26 meeting. A few have penciled in another rate cut before the end of the year to ensure growth will be sustained amid the global economic turmoil.