BSP to stay ‘vigilant’ against inflationary pressures

The Bangko Sentral ng Pilipinas (BSP) will “remain vigilant" against inflationary pressures and keep tabs on the impact of the US Federal Reserve’s decision to scale down its growth forecast for the United States. "We will continue to monitor the Fed's holding pattern to see how this will affect investor appetite towards emerging market economies, including the Philippines, and how the current interest rates and economic growth differentials will impact on portfolio flows," BSP Gov. Amando Tetangco Jr. said in a text message to reporters. The Fed now sees the US economy growing by 2.7 percent to 2.9 percent this year from an earlier forecast of 3.1 percent to 3.3 percent. It also downgraded its 2012 projection to 3.3 percent to 3.7 percent instead of 3.5 percent to 4.2 percent. The move comes after the International Monetary Fund cut its outlook on the US economy. Tetangco said the BSP “will also monitor the impact of our last monetary action." The Monetary Board’s June 16 decision to keep interest rates unchanged and increase banks’ reserve requirement to 20 percent from 19 percent takes effect Friday, June 24. The one percentage point hike in the reserve requirement is expected to reduce excess liquidity in the financial system by about P38 billion. — ELR/VS, GMA News