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Philippines is ready for Federal Reserve's stimulus reduction

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September 23
12:21 AM 2013

The Philippines had been prepared for a possible tapering of the US Federal Reserve's stimulus reduction policy. The country would deal with Fed's policy with tools dealing capital outflows, said Central Bank Deputy Governor Diwa Guinigundo.

Guinigundo said in a briefing in Manila September 21, "We can ride out any turbulence as we have policy tools in our hand that we can deploy anytime. The measures include boosting dollar and peso liquidity, careful surveillance of risk, use of forward guidance, tapping currency-swap agreements, and possible tightening of monetary policy."

According to World Bank Managing Director Sri Mulyani Indrawati said last week, emerging market nations should prepare as the Fed would eventually reduce its bond buying programs. This was after higher borrowing costs had been seen to come.

The benchmark interest rate of the Banko Sentral ng Pilipinas was kept at 3.5% record low for a seventh meeting this month. This was after the inflation eased to a four year low.

Last week, the peso had also had its best weekly gain since last June 2012. This was after the surprise decision from the Federal Reserve to refrain from decreasing its stimulus buoyed emerging market assets.

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