UPDATE 2-Philippine c.bank to remain supportive of growth until recovery underway
(Adds details on quarantine restrictions)
MANILA, July 15 (Reuters) – The Philippine central bank’s monetary policy will remain supportive of the economy until recovery is “firmly underway”, its governor said on Thursday, while assuring markets it will clearly communicate its exit strategy from easy policy.
While the Federal Reserve’s stimulus withdrawal could exert pressure on emerging central banks to follow suit, the decision by the Bangko Sentral ng Pilipinas’ (BSP) to unwind rate cuts will depend on the domestic inflation outlook, Governor Benjamin Diokno said.
Inflation is forecast to remain manageable and that would allow the central bank to continue to provide monetary stimulus to the real sector, Diokno told a media briefing.
The BSP would continue to be “data dependent in policymaking”, said Diokno, adding “this prudent practice will help us avoid the premature withdrawal of policy support.”
The BSP kept interest rates at a record low of 2.0% for a fifth straight meeting on June 24, and economists expect rates to stay at that level to ensure the economy bounces back from the impact of pandemic-induced lockdowns.
The Philippines has been battling one of Asia’s worst and longest-running COVID-19 outbreaks. It lowered its economic growth targets for this year and next after a deeper-than-expected contraction in gross domestic product in the first quarter.
It has gradually eased COVID-19 curbs to encourage business activity and allow greater mobility, but the speed at which it can fully reopen depends on its vaccination rollout.
As of Tuesday, 3.89 million people, or 3.5% of the country’s 110 million population, had been fully vaccinated.
President Rodrigo Duterte extended on Thursday coronavirus restrictions on economic activities and movement of people in the capital region and nearby provinces until the end of July. Some provinces and cities in central and southern Philippines were placed under looser curbs.
With more than 1.49 million infections and 26,314 deaths, the Philippines has the second-highest number of COVID-19 cases and deaths in Southeast Asia, next to Indonesia.
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