BANGKO Sentral ng Pilipinas Governor Amando Tetangco Jr. said the signal from the European central bank to step up its stimulus program will possibly create more volatility in the global financial markets.
But he assured local monetary authorities were ready to deploy the needed tools when necessary and appropriate.
“The ECB has been consistent in its messaging—they will do what is needed to meet their inflation target. Their policy meeting is not until a few weeks from now so this is part of guiding market expectations, a powerful tool of central bank authorities,” Tetangco said in a text message Friday.
“Our operating environment is now more challenging with oil prices continuing to fall and global growth prospects softening. For the Philippines, these mean more potential financial market volatility in the near term, for which we have tools,” he said.
Tetangco said cited developments peculiar to the Philippine economy, such as El Niño that was expected to intensify through mid 2016 and the national elections.
“Right now, our forecast for inflation is still a slow move to within target over the policy horizon, indicating monetary policy stance remains appropriate for now. We will continue to monitor developments including growth prospects in advanced economies and China, and deploy tools as and when appropriate,” he said.
ECB president Mario Draghi on Thursday said his policy team could step up its stimulus program as early as March “in response to stubbornly low inflation and turbulence in the financial markets.”
Draghi said ECB was poised to take further actions in the future if necessary, and that there were no limits to how far they could go to deploy their instruments.
In an inflation report for the fourth quarter of 2015 on Friday, Bangko Sentral said global economic prospects softened on the continuing slowdown in emerging markets.
“… The subdued economic outlook for emerging markets dampened global growth prospects, to which a number of central banks responded by easing their monetary policy settings to support domestic economic activity and stave off deflationary pressures,” Bangko Sentral said.