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Bangko Sentral likely to begin monetary policy 'normalization' in second half of 2022: Diokno

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Jessica Fenol and Warren De Guzman, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="Bangko Sentral ng Pilipinas’ (BSP) Governor Benjamin Diokno at work shortly after an interview with ANC, held at the BSP headquarters in Manila on March 12, 2019. George Calvelo, ABS-CBN News/File" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/business/04/01/20190312_bsp-ben-diokno-gc_000_1000.jpg"/><figcaption>Bangko Sentral ng Pilipinas’ (BSP) Governor Benjamin Diokno at work shortly after an interview with ANC, held at the BSP headquarters in Manila on March 12, 2019. <em>George Calvelo, ABS-CBN News/File</em></figcaption></figure></div><p>MANILA - Monetary policy &quot;normalization&quot; could begin in the second half of the year, Bangko Sentral ng Pilipinas Governor Benjamin Diokno has said, as the central bank prepares to unwind stimulus placed during the COVID-19 pandemic.</p><p>A Bloomberg report quoted the central bank chief as having said that a 2.5 to 2.75 percent interest rate is &quot;reasonable and consistent” with the country&#x27;s direction in terms of growth and inflation targets.</p><p>“We plan to start the normalization process in the second half of the year,” Diokno was said in a text message, according to the report.</p><p>A 2.75 percent interest rate might also be reached next year, Diokno added.</p><p>When pressed by ABS-CBN News for further details on the timing of the monetary policy tightening, the Governor responded with a coy emoji. The BSP is usually mum on targets until a formal announcement has been made.</p><p>The Monetary Board kept the benchmark borrowing rate at its <a href="https://news.abs-cbn.com/business/03/24/22/bsp-keeps-benchmark-rate-at-2-percent" target="_blank">record-low of 2 percent</a>, as part of its pandemic measures to support economic recovery.</p><p>But analysts are expecting the central bank to begin tightening the key policy rate this year as the inflation outlook remains tilted on the upside due to the rising prices of basic goods.</p><p>Local pump prices have been elevated due to the impact of the ongoing tension between Russia and Ukraine on the global crude oil market.</p><p>Diokno earlier said <a href="https://news.abs-cbn.com/business/03/14/22/inflation-seen-to-rise-amid-russia-ukraine-crisis-diokno" target="_blank">inflation could reach up to 4.7 percent</a> if the Dubai crude averages about $140 per barrel this year in a worst-case scenario under the BSP&#x27;s sensitivity analysis.</p><p>But Dubai crude is now hovering around $101 per barrel from about $110 per barrel in March. </p><p>Inflation forecast for 2022 and 2023 was revised to 4.3 percent and 3.6 percent, respectively, based on the Dubai crude price forecast of $102.23 per barrel this year and $82.33 per barrel next year, the BSP said.</p><p>Fitch Solutions earlier said it was expecting the central bank to hike interest rate by as much as <a href="https://news.abs-cbn.com/business/11/22/21/bsp-seen-hiking-rates-by-75-bps-in-2022" target="_blank">75-basis points</a> in 2022. </p><p>ING Manila&#x27;s Senior Economist Nicholas Mapa, meanwhile, said an earlier interest rate hike in May could prevent a more aggressive tightening in the second half of the year. </p><p>Diokno also earlier said that the BSP is keeping an eye on the monetary policy actions of the US Federal Reserve, which has signaled to increase its borrowing rates aggressively as inflation hits record highs.</p><p>The BSP is set to hold its next monetary policy-setting meeting on May 19.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/02/21/22/bsp-has-room-to-maneuver-keeps-an-eye-on-fed-diokno">Bangko Sentral has &#x27;room to maneuver&#x27;, keeps an eye on Fed: Diokno</a></li>	<li><a href="https://news.abs-cbn.com/business/03/17/22/fed-hikes-interest-rates-signals-aggressive-fight-to-curb-inflation">Fed hikes interest rates, signals aggressive fight to curb inflation</a></li></ul><div><strong>RELATED VIDEO:</strong></div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1962321" width="100%"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div><div><br/> </div>

Monetary policy 'normalization' could begin in the second half of the year, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said.

Bangko Sentral likely to begin monetary policy 'normalization' in second half of 2022: Diokno

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Bangko Sentral likely to begin monetary policy 'normalization' in second half of 2022: Diokno

Jessica Fenol and Warren De Guzman,

ABS-CBN News

Published Apr 01, 2022 10:56 AM PHT

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