Bangko Sentral has 'room to maneuver', keeps an eye on Fed: Diokno

Jessica Fenol, ABS-CBN News

Posted at Feb 21 2022 12:35 PM | Updated as of Feb 21 2022 04:50 PM

MANILA - Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday the monetary board is closely monitoring the actions of the US Federal Reserve while keeping the country's interest rate at 2 percent. 

The manageable inflation rate provides room to keep the benchmark borrowing rate low, Diokno said in an interview with Bloomberg TV. 

"We continue to set the rate at 2 percent, I think we still have room to maneuver because the inflation outlook looks good and that of course growth also is picking up, employment is going down," Diokno said. 

"We’ll wait until what happens in the US and the extent to which they will tighten...We evaluate how the Fed's rate will affect our output and our inflation rate," he added.

Analysts expect the Fed to hike rates several times this year as inflation soars to 7.5 percent in the US. BDO Unibank chief market strategist Jonas Ravelas earlier said 4 rate hikes by the Fed is a conservative estimate. 

Inflation in the Philippines, meanwhile, settled at 3 percent in January, well within the government's 2 to 4 percent target range. 

Other indicators showed that the country is also "just right where we want it to be," Diokno said.

Gross domestic product (GDP) grew 5.6 percent in 2021, slightly exceeding the government target. Unemployment is decelerating while foreign direct investments under the current administration continue to pour in, Diokno said.

From January to December 2021, FDIs grew 52 percent, he said. 

Asked what's the challenge for the next administration, Diokno said "continuity is the name of the game."

"The next government will have an easier time because of all these reforms that we did despite the pandemic. I think the next president will do well by exercising continuity," Diokno said.

The administration of President Rodrigo Duterte lobbied for amendments in the retail trade liberalization act and the public services act, among others.

These measures are seen to attract more investments, Diokno said.

The Monetary Board will hold another policy-setting meeting in March, coinciding with the US Fed's meeting. 

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