Philippines Is Watching Short-Term Capital Flows, Tetangco SaysNorman P. Aquino
The Philippine central bank is monitoring the impact of short-term capital flows on financial markets, Governor Amando Tetangco said, as emerging-markets confront the prospect of a reduction in U.S. monetary stimulus.
“Even with the capital outflow, the balance of payments has still remained in surplus and it is something that will continue,” Tetangco said by phone today in a Bloomberg Television interview with Rishaad Salamat. “We continue to watch the short-term capital flows and see how these can possibly affect our financial markets.”
Bangko Sentral ng Pilipinas held its benchmark interest rate at a record-low 3.5 percent for an eighth meeting yesterday to support Southeast Asia’s fastest-growing economy as inflation stays within the central bank’s targeted range. “Buoyant” domestic demand and favorable business and consumer sentiment reduced the need for further monetary policy stimulus, Tetangco said today.
“Within-target inflation forecasts for the next three years and the firmly anchored inflation expectations” provide benign inflation dynamics, the governor said. The central bank also wants to “keep a steady hand given the still volatile global financial markets that have been caused basically by unresolved fiscal issues in the U.S.,” he said.
The Monetary Board took note of strong liquidity growth, which is expected to be temporary and is a result of adjustments to the special deposit account facility, he said.