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July 21, 2024

BSP says exit strategy to be data-driven

After lifting interest rates by 25 basis points last week as part of policy normalization, Bangko Sentral ng Pilipinas Governor Benjamin Diokno reiterated that any move to lift time-bound measures put in place to support the economy during the COVID-19 pandemic will be carried out based on latest economic data and not tied to any calendar date.

“The timing and the conditions of the BSP’s exit strategy remain data-driven,” Diokno said during the recent Asian Development Bank Institute (ADBI) webinar.

Diokno pointed out that inflation and growth outlook over the medium term, the country’s public health status, and the domestic and global risks to the economy would guide the exit strategy.

“The balancing act requires a well-planned, well-calibrated, and well-communicated exit strategy to avoid causing substantial market volatility, reduce potential spillovers, and sustain the recovery momentum,” Diokno added.

As part of its pandemic response measures, the BSP implemented timely and decisive measures to extend financial relief to various stakeholders, boost bank lending, and promote continued access to financial services.

These include the historic-low key policy rate, provisional advances to the national government, and time-bound regulatory and operational relief measures.

As part of the policy normalization process, the Monetary Board raised the interest rate on the overnight reverse repurchase facility by 25 basis points to 2.25 percent.

The national government also fully settled its P300 billion provisional advance ahead of the maturity schedule of June 2022.

Likewise, the BSP reconfigured its government securities purchasing window into a regular intraday facility under its interest rate corridor framework as part of the unwinding process.