Governor Medalla Says BSP Will Be More Active In FX Markets

Wires carry comments from BSP Governor Medalla who puts emphasis on FX developments, noting that USD strength requires Philippine policymakers to deliver larger rate hikes, even as they will not match the pace of Fed tightening on a point-by-point basis. The Governor says the BSP has other measures to reduce FX volatility and has been quite active in currency markets this week, with the intention to be even more active going forward.

• Bangko Sentral ng Pilipinas raised its key policy rate by 50bp Thursday in response to broadening price pressures, with the risks to the inflation outlook remain tilted toward the upside until 2023. The decision was in line with consensus forecast (and our prediction), with the policy rate topping its pre-pandemic level. It came on the heels of a hawkish FOMC outcome, which prompted USD/PHP to refresh record highs, albeit the statement did not mention either of these factors.