Philippine central bank seen as key stabilizer in uncertain global landscape

THE BANGKO SENTRAL ng Pilipinas’ (BSP) monetary policy and other tools will be key to supporting the economy and ensuring the stability of the country’s financial system amid a volatile external environment.

- By Luisa Maria Jacinta C. Jocson Senior Reporter

“In a highly uncertain environment, central banks like the BSP can play a key stabilizing role by striking the right balance between managing inflation and growth risks,” Asian Development Bank (ADB) Macroeconomics Research Division Principal Economist Matteo Lanzafame said in an email.

Moody’s Analytics economist Sarah Tan said that central banks “play a critical role in anchoring stability” amid heightened uncertainty.

“For the BSP, this involves deploying its policy toolkit to maintain price stability, ensure orderly market functioning, and support sustainable growth,” Ms. Tan said in an email.

The Bank for International Settlements (BIS) in its latest Annual Economic Report said that central banks must deal with the immediate fallout while keeping top of mind the deeper structural weaknesses that threaten the resilience of the global economy.

Markets and economies across the globe have been jolted by the United States’ flip-flopping trade policies since early this year.

The US slapped a 19% tariff on Philippine goods in a trade deal secured between President Ferdinand R. Marcos, Jr. and US President Donald J. Trump in July. The tariff rate took effect on Aug. 7.

This was the same rate imposed on goods from Cambodia, Malaysia, Thailand and Indonesia. It is slightly higher than the 20% on Vietnam and Taiwan, but lower than the 15% for Japan and South Korea.

“The BSP can help cushion the economy through continued monetary policy easing, which eases pressure on household budgets and supports spending,” Ms. Tan said.

The Philippine economy grew an annual 5.5% in the second quarter, up from 5.4% in the first quarter.

For the first half, gross domestic product (GDP) growth averaged 5.4%, slower than the 6.2% a year ago.