Still too early to talk about COVID-19 exit strategy, BSP Governor says

It is still too early for the Bangko Sentral ng Pilipinas (BSP) to start its COVID-19 exit strategy as the timing will largely depend on economic data, a top official said Wednesday.

In a virtual briefing, BSP Governor Benjamin Diokno reiterated that this year will be a recovery year for the country, and that the economy won't be back to its pre-pandemic levels until the second half of 2022, subject to upward and downward risks.

"The short answer is no. It is too early to talk about an exit strategy at this time," he said when asked if it is time for the central bank to consider starting one.

As part of its mandate, the BSP maintains price stability conducive to a balanced and sustainable growth of the economy and employment. It also promotes and maintains the stability and convertibility of the peso.

Diokno noted, however, that the BSP is actively taking part in international discussions on policy interventions and exit strategies post-pandemic, which tend to be grounded on macroeconomic conditions and institutional characteristics.

"As I mentioned, the timing of the exit strategy will depend largely on the economic data, particularly on the outlook for inflation and GDP (gross domestic product) growth," he explained.

Inflation has continued to accelerate in the past months, clocking in at 49% in February or the fastest since January 2019's 4.4%. Meanwhile, GDP fell to -9.5%, the worst on record based on available data from the Philippine Statistics Authority (PSA).

"The recent inflation uptrend did not necessarily trigger an exit from policy stimulus. There are non-monetary measures that the national government can do and is going to directly address the supply-side factors," Diokno said.

"Having a carefully formulated exit strategy from policy measures against the effects of COVID-19 enables the BSP to have a clear guide to future actions when the economy fully recovers and growth becomes sustainable," he added.

The Monetary Board of the BSP has so far met only once this year, on February 11, when it decided to keep policy rates at record lows. The next meeting is scheduled for Thursday, March 25.

Policy rates were slashed 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.—AOL, GMA News