BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno told reporters on Tuesday that they will “continue to exercise patience” in holding the monetary policy rates at accommodative levels amid the growth in the country’s gross domestic product (GDP) in the third quarter of the year.
“Philippines’s GDP grew 7.1 percent year-on-year in the third quarter. This stronger-than- expected growth—versus BSP’s forecast of 6.2 percent, for example—increases the likelihood that the revised growth projection of 4 to 5 percent in 2021 would be exceeded,” Diokno said in a Viber message following the Philippine Statistics Authority’s (PSA) announcement.
“The Bangko Sentral ng Pilipinas will continue to be patient with its accommodative monetary policy stance to support the economy’s full recovery,” he added.
Diokno has been keeping the handle steady on the record-low monetary policy rate of 2 percent for the entire year, despite the rise of inflation above its annual target range of 2 to 4 percent.
In an analysis piece after the GDP announcement on Tuesday, Rizal Commercial Banking Corporation Chief Economist Michael Ricafort said the accommodative monetary policy measures would be “a major pillar” of the economic recovery program to spur greater demand for loans and credit.
ING Bank Economist Nicholas Mapa, meanwhile, said the upbeat performance in the third quarter of the year shows that growth is possible even during lockdowns. He also said faster growth may give the governor room to adjust monetary policy rates in the first half of next year.
Just last month, Diokno said the BSP is staying the course in keeping the monetary policy in the Philippines accommodative
to support growth amid tighter global monetary policy, rising inflation and continued risk aversion to loans by banks.
Diokno said the BSP continues to be well-positioned in handling various economic developments in the global and local economic environment amid keeping the monetary policy on record low levels for the rest of the year.
“Together with appropriate fiscal and health interventions, keeping a steady hand on the BSP’s policy levers amid a manageable inflation outlook should allow the economic recovery to gain more traction,” Diokno earlier said.
The BSP is expected to meet on November 18 for its next monetary policy setting meeting. This is the second to the last monetary policy meeting scheduled for the year.