ASEAN KEY DESTINATIONS
Philippines central bank rate cuts are over
BSP Deputy Governor Diwa Guinigundo brushed aside talk that a policy rate cut was expected in the coming months after Indonesia opened with a 25-basis points reduction.
"Well, at this point all we can say is that we have enough liquidity in the market. Bank lending has also been providing funding for various economic activities and inflation has been relatively subdued. Now the importance of inflation being under control is that it will not impinge on consumption expenditure. So we would expect that consumption expenditure will continue to drive economic growth," Guinigundo told reporters.
Bank lending has been growing between 19 percent and 20 percent and has been promoting economic growth, he said.
"If one were to look at the distribution of these loans it is the productive sectors of the economy that are getting these loans. Because it is important that we have enough loans to the various productive sectors of the economy," Guinigundo said.
He noted that the policy-making Monetary Board also looked at the various long-term trends of prices in various asset markets to determine whether a bubble was brewing.
"The conclusion is that the possibility of bubble situation continues to be remote. In other words the movements in these asset markets continued to be driven by fundamentals. There is actual demand coming from different sectors of the economy," Guinigundo said.
He said that if interest rates were kept at their present levels and with risk aversion abating "then some investment recovery, both in domestic and foreign investments, may be expected to make economic growth in the Philippines more sustainable over the long run."
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