BSP says has room to adjust policy to support economy

Reuters

Posted at Aug 17 2012 12:08 PM | Updated as of Aug 17 2012 08:08 PM

MANILA - The Philippine central bank said on Friday it has enough leeway to adjust policy rates to shield the domestic economy from global headwinds, even if there is an uptick in the rate of inflation.

"There is enough room for policy rates to be adjusted so it could serve as buffer against strong global headwinds," Zeno Abenoja, director at Bangko Sentral ng Pilipinas' Department of Economic Research, said during the presentation of the central bank's second quarter inflation report.

Central bank Governor Amando Tetangco said this week the country's inflation may rise in the coming months due to weather-related supply disruptions, but the uptick should not limit the central bank's policy room. 

The central bank still sees inflation averaging near the lower end of the official 3 percent to 5 percent target this year.

The central bank cut interest rates by 25 basis points to a new low of 3.75 percent on July 26, the third reduction this year, to shield the economy from slower global growth and temper a rising peso that is hurting exports and remittances.