MANILA, Philippines - The Bangko Sentral ng Pilipinas said yesterday the local financial markets are expected to benefit in the long run from the US Federal Reserve’s decision to further taper its economic stimulus.
“The Fed’s move, which was widely expected, helps to take out one element of uncertainty in the markets,†BSP Governor Amando M. Tetangco Jr.
The US Federal Reserve on Wednesday announced a further $10-billion cut in its monthly purchases of US Treasuries and mortgage bonds to $65 billion as it stuck to a plan to wind down its economic stimulus despite recent turmoil in emergency markets.
The Fed has been injecting money in the US economy through its monthly massive bond purchases but it decided to start scaling this back in December last year.
The first $10-billion cut announced in December already added volatility in global financial markets and investors were seen repatriating their funds from emerging market and economies.
“When the dust settles, we hope the markets would distinguish among EMEs (emerging market and economies), which have weak current accounts, and those that have strong fundamentals such as the Philippines,†Tetangco said.
“In the meantime, our domestic market participants would be well-served if they continue to keep their eyes on the fundamental story of the country,†he added.
The Philippine economy continued to expand in 2013, with growth accelerating to 7.2 percent from the 6.8 percent in 2012.
The country’s current accounts remained in surplus last year, while its external position continued to be healthy. Inflation, meanwhile, remained manageable and averaged three percent last year, at the low end of the central bank’s three to five percent target.
The government hopes to grow the economy by 6.5 to 7.5 percent this year, banking on increased investments especially in manufacturing, and continued robust domestic consumption.