BSP need not mirror Fed decisions: Espenilla

FILE: Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla, Jr. (Photo By Bangko Sentral ng Pilipinas , CC BY-SA 4.0)

MANILA — The Bangko Sentral ng Pilipinas (BSP) need not follow what the Federal Reserve does since these central banks have different factors to consider in implementing their monetary policies, BSP Governor Nestor A. Espenilla Jr. said Friday.

Minutes of the Federal Open Market Committee (FOMC) meeting from October 31 to November 1 showed that US monetary officials are keen in hiking the Fed’s key rates in the near term even as inflation remains below the 2 percent target since labor conditions continue to firm up.

Espenilla told journalists that the BSP does not need to follow whatever the Fed decisions are.

“Our monetary policy is independent of what Fed does. We’re not obliged to follow since we don’t have fixed exchange rate. Instead, our primary focus is on the inflation outlook relative to our target,” he said.

The BSP’s policy-making Monetary Board will have its last meeting this 2017 on December 14 and analysts are divided on the MB’s decision during that meeting, with some projecting a hike given the sustained rise of inflation.

To date, the BSP’s key rate, or rate of the reverse repurchase (RRP) facility, is at 3 percent, while rate of the repurchase (RP) facility is 3.5 percent and the special deposit account (SDA) facility is 2.5 percent.

The three facilities represent the central bank’s interest rate corridor (IRC), which was implemented since June 2016 to “better manage inflation and promote long-term sustainable growth.”