By Joann Santiago
Philippine News Agency
The consolidated efforts made by major central banks spearheaded by the US’ Federal Reserve was considered by the Bangko Sentral ng Pilipinas (BSP) as a move that will give it more leg room in its policy stance.
In a text message to reporters, BSP Governor Amando Tetangco Jr. said the rate cuts along with the “improved inflation expectations gives us greater monetary policy space.â€
This statement was made after the Fed and six other central banks cut their respective policy rates Wednesday in a bid to address the continuing global slowdown that started in the US.
The other central banks that cut rates include the Bank of England, the European Central Bank as well as those in Canada, China, Sweden, and Switzerland.
To date, the Fed’s policy rate is 1.5 percent, down from two percent when the US central bank last slashed it in June 2008 in line with its move to save the world’s largest economy from collapsing.
After the rate cuts the Bank of England rate is now at 4.5 percent from five percent previously while that of the European Central Bank is now at 3.75 percent.
The rate cuts made by seven major central banks around the world was, on the other hand, contrary to the decision made by BSP’s policy-making Monetary Board (MB) Monday this week.
The Board kept the central bank’s present policy rates, which is six percent for the overnight borrowing or reverse repurchase (RRP) facility and eight percent for the overnight lending or repurchase (RP), on back of improving inflation expectations due to the decline of rate of price increases.
Inflation last September stood at 11.9 percent from the previous month’s 12.5 percent as prices of oil and food continue to decline.
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