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Friday, March 29, 2024

BSP to consider Fed hike in decision

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BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. said Thursday local monetary authorities would not necessarily move “in sync” with the US Federal Reserve if it raises interest rates next month. 

“The Fed’s judgement on the timing of its next move, as mentioned in the statement, will be based on forthcoming data on jobs and inflation. 

As is our practice, we include new information from Fed signals in our scenario building,” Tetangco said in a statement Thursday. He said local monetary authorities would look at the potential impact on financial markets”• the segment most reactive to the Fed”• in the near term, and the impact on bank portfolios, especially the interest rate sensitive bank balance sheet accounts as well as banks’ capacity to lend to productive sectors of the economy, in the medium term. 

“In other words, it’s not a linear analysis, not a one to one correspondence. This is why we have always said that, while we are mindful of the Fed, we do not necessarily have to move in sync with it,” he said. Minutes released by the Fed officials Wednesday showed that the next interest rate increase could be closer than it appeared. 

Tetangco earlier said that local monetary authorities were closely watching the developments in the world’s largest economy but reiterated the country’s macroeconomic fundamentals remained strong and sound.

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