Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno has reiterated that the central bank will keep monetary policy accommodative in support of the country’s economic recovery from the COVID-19 crisis.
In a speech delivered during the Sulong Pilipinas 2021 held Monday, Diokno said the economy is at the tail end of the crisis, with the rollout of vaccination program ongoing. At the same time, he said the BSP recognizes that economic recovery is still in its early stage and, as such, expansionary monetary support remains warranted.
“We recognize that the economy is still in its nascent recovery phase,” Diokno said.
“The accommodative monetary policy settings provide significant stimulus to demand and should be allowed to continue to work their way through the economy to bolster recovery in private consumption and investment,” the BSP Governor added.
Since the onset of the pandemic, the BSP has so far infused over P2 trillion in liquidity into the financial system, equivalent to 11 percent of the country’s gross domestic product.
Among the BSP’s long list of COVID-response measures were the series of policy rate cuts last year totaling 200 basis points. These moves were meant to influence banks to lower their lending rates as well, thereby encourage credit taking to support economic activities.
The BSP also cut the reserve requirement for universal and commercial banks, as well as for smaller banks last year.
The economy contracted by 9.6 percent in 2020 as a result of the necessary quarantine measures, which restricted mobility.
Green shoots have been emerging since the third quarter of 2020, including improved manufacturing activity. However, the recent surge in COVID-19 cases meant there is no room for letup in efforts toward economic recovery.
“As the Philippines continues its battle against COVID-19, the BSP remains one with the government and the entire Filipino people in dealing with this crisis head on and in pushing the economy toward full recovery,” the BSP Governor said.
“…the impact of the COVID-19 crisis on the Philippine economy will be transitory. Our fundamentals remain solid, and these will carry us through full recovery,” the BSP Governor also said.