THE CENTRAL BANK is not keen on “drastic” liquidity-infusing moves as the impact of the pandemic is better addressed by fiscal measures, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.
“Where we are right now is that we feel that our current monetary policy stance is still appropriate for the recovery. I don’t think there will be any drastic moves on our part to inject more liquidity into the system,” Mr. Diokno said in a Bloomberg TV interview on Wednesday, noting the impact from the measures rolled out in 2020 have yet to be fully absorbed by the financial system.
The Monetary Board maintained its key policy rate at a record low of 2% at its policy setting in March, as support for the pandemic-hit economy even as inflation surpassed the annual target range of 2-4%.
Central bank officials have assured that they will remain watchful of the inflation spike’s second-round effects such as wage and transport fare hikes.
The National Economic and Development Authority (NEDA) earlier estimated the two-week enhanced community quarantine in Metro Manila and nearby provinces could shave off around 0.8 percentage point from this year’s gross domestic product.
Mr. Diokno said the economy will likely grow by 6%-7% this year, below the official target range of 6.5%-7.5% set by economic managers.
For now, Mr. Diokno said heavier lifting should be on the fiscal side.
“I think there’s still a need for some fiscal stimulus. I think for example, we need to take care of the poor and the vulnerable who were affected by the lockdown,” he said.
Lawmakers are pushing for a third stimulus measure to support affected businesses and drive recovery. House Bill 8628 or the Bayanihan to Arise as One Act, which proposes to allocate P420 billion for a social amelioration program, wages subsidy for affected workers and the acquisition of more COVID-19 vaccines and medicine, among others.
Mr. Diokno also confirmed that the BSP extended the maturity of the P540-billion loan to the National Government by three months. It was originally supposed to have been repaid in March.
National Treasurer Rosalia V. de Leon said in a Viber message that the no-interest BSP loan should be repaid by July 12.
“We are fortunate that under the revised charter of the central bank, we are really allowed to lend to the government in extraordinary times and these are extraordinary times,” Mr. Diokno said.
Finance Secretary Carlos G. Dominguez III on Tuesday said the government is looking to wind down its loans from the central bank this year or next. — Luz Wendy T. Noble with inputs from Beatrice M. Laforga