Gov't to Ensure That Monetary Policy Is Ahead of Inflation
MANILA, Philippines - The Philippine government wants to ensure monetary policy is ahead of inflation and will consider the peso's recent strength and strong inflows in future policy actions, Finance Secretary Cesar Purisima said.
The outlook on oil prices, domestic liquidity conditions and developments in the global economy would weigh on the central bank's policy review yesterday, he said.
''We want to be sure we are ahead of the curve in dealing with inflation,'' Purisima, who sits on the Monetary Board, said in the Dealing Room, a Reuters Messaging chat room.
''We, however, are vigilant to make sure that we monitor closely hot money flows,'' he said.
Analysts expect policymakers to keep the overnight borrowing rate steady at a two-year high of 4.5 percent, but raise banks' reserve requirement by 1 percentage point, the second such increase in as many meetings.
The Philippines, like other emerging markets, have seen rising inflows as funds move out of developed economies in search of higher yields and with the prospect of a US debt default, pushing the peso to a three-year high on Wednesday and the stock market to new peaks last week.
Central bank officials have said the strength of the peso could dampen imported inflation.
''The Philippine peso is market determined and with what is happening in the US, our currency has appreciated,'' Purisima said. ''As policymakers, we have to consider this development in determining future policy actions. …