BSP to maintain market presence to prevent excessive volatilities
MANILA - The Philippine central bank will maintain its presence in the markets as appropriate to prevent excessive volatilities in financial asset prices, Governor Amando Tetangco said on Thursday, after the U.S. Federal Reserve extended its stimulus program as expected.
"The Fed's decision prolongs the waiting game for the inevitable," Tetangco said in a text message to reporters.
"In the meantime we can expect 'risk on' behavior in emerging markets," he said. "The BSP (central bank) will be watching market conduct closely for excessive volatilities in financial asset prices and will maintain presence in the markets as appropriate."
The Federal Reserve extended its support for a soft U.S. economy on Wednesday, sounding a bit less optimistic about growth as it announced plans to keep buying $85 billion in bonds per month.
In announcing the decision, the Fed nodded to weaker economic signals that have been due in part to a fiscal fight in Washington that shuttered much of the government for 16 days earlier this month.
The central bank noted that the recovery in the housing market had lost some steam and suggested some frustration at how slowly the labor market was healing.
However, it also dropped a phrase expressing concern about a run-up in borrowing costs, suggesting greater comfort with the current level of interest rates.
"Available data suggest that household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months," the policy-setting Federal Open Market Committee said. "Fiscal policy is restraining economic growth."
The decision on bond buying was widely expected and the Fed's statement differed only slightly from the economic assessment it delivered after its last meeting in September.