BSP: Policy rate not enough to manage inflows

Posted at 10/30/12 12:40 PM

MANILA - The Philippine central bank can no longer rely on policy adjustments alone and will look at other policy tools to manage surges in capital flows, its governor said on Tuesday, a day after the Southeast Asian nation got a ratings upgrade from Moody's. 

"We can no longer rely on just adjustment in policy rate to address challenges brought about by surges in capital flows, we have to use other tools," Amando Tetangco told reporters. 

"We have to be creative to see specifically what appropriate tools to use," he said. 

On Monday, Moody's Investors Service upgraded its credit ratings on the Philippines by one level, bringing the Southeast Asian country just a notch away from an investment grade status. 

The Bangko Sentral ng Pilipinas cut its key policy rate for a fourth time this year on Thursday, bringing it to a fresh record low of 3.5 percent, to help manage capital inflows that have kept the peso rising against the U.S. dollar and to boost growth amid weak external demand.