MANILA, Jan 7 (Mabuhay) –The Bangko Sentral ng Pilipinas (BSP) is starting to prepare the unwinding of pandemic interventions, but the central bank continues to hold a patient hand on its policy levers in the next few quarters.

According to BSP Governor Benjamin Diokno, the BSP will continue to focus on striking a delicate balance between providing economic support and preventing the buildup of inflationary pressures and risks to financial stability.

Under the planned exit strategy, the central bank will first look into the recalibration of monetary operations before unwinding the liquidity provisions and reducing monetary accommodation and preparing for future crises.

“We reiterate that the exit strategy is not calendar-based but outcome-based,” Diokno told reporters in a virtual briefing on Thursday.

Among the domestic factors being observed are liquidity and credit dynamics, financial sector risk, the state of public health, as well as evolving global developments and potential spillovers.

“Under current circumstances, the timing and days of the exit remain to be determined. While recent indicators point a recovery in economic activity, the recent uptick in new COVID cases represents a downside risks to the outlook for growth and inflation,” Diokno said.

In April 2020, Diokno said the BSP is ready to use all the tools necessary to soften the potential economic slowdown brought about by the pandemic.

The BSP last year loaned out P540 billion to the Philippine government in July, mainly to be used for budgetary support as the country faces a fiscal deficit due to the pandemic. It approved another P300 billion loan in December 2020.

It earlier approved two loans worth P540 billion each to the national government in December 2020 and another in October last year.

The central bank also slashed key policy rates by 200 basis points in 2020 — 25 basis points in February; 50 basis points each in March, April, and June; and another 25 basis points in November.

It also reduced the reserve requirement for all universal and commercial banks by 200 basis points in March 2020, and by 100 basis points for thrift, rural, and cooperative banks in July last year.

“This is why the BSP chooses to keep a patient hand on its various policy levers. At the same time, we need to maintain some flexibility in case conditions do not evolve as expected, hence we will always rely on the data in guiding our future decisions on policy actions,” Diokno said Thursday. (MNS)

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