MANILA – The Philippine economy can accommodate a “moderate” rate increase by the US Federal Reserve and monetary authorities don’t need to match a possible adjustment, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said Wednesday.

Guinigundo said he did not expect a rate action from the Federal Reserve after this week’s meetings, which will come in the wake of negative news on the US economy.

“The economy is very robust such that a moderate adjustment, should it be warranted, in interest rates could very well be accommodated,” Guinigundo told ANC’s “Market Edge with Cathy Yang.”

While a rate increase in the world’s largest economy would impact on local borrowing costs, Guinigundo said government had “sufficient fiscal space” to sustain public spending.

The BSP’s policy settings have “sufficient flexibility” due to “stable” inflation, he said.

“Even if there is tightening, the Philippines does not have to match the tightening move of the US Fed… We have the fiscal and monetary space to be able to do so,” he said.

Investors in the local stock market have kept mostly on the sidelines ahead of the Fed decision this week and an upcoming referendum on the United Kingdom’s membership in the European Union.

Guinigundo said the so-called “Brexit” vote could affect local sentiment negatively.

“The collateral impact of that in the domestic market is basically to depress investor and consumer confidence. They do expect a possible fallout from a Brexit would indeed rattle investors,” he said.