THE Bangko Sentral said Monday it will review its economic assumptions for the year, including remittance and inflation forecasts, taking into consideration the recent earthquake and tsunami and Japan as well as the political tension in the Arab nations.
“The magnitude of the impact [of earthquake] on the Japanese economy will of course be clearer as the days unfold. We are monitoring the impact of the events in Japan on global aggregate demand [via trade] and on inflation dynamics [through commodities],” said Bangko Sentral Governor Amando Tetangco Jr.
“We will consider these during our next policy meeting,” he said, referring to the March 24 meeting of the Monetary Board.
The board, which acts as the policy-making body of the Bangko Sentral, will decide if it will keep the policy rates at record low levels of 4.0 percent for overnight borrowing and 6.0 percent for overnight lending or begin its policy tightening to curb rising inflationary pressures.
Several foreign banks have prodded the Bangko Sentral to begin raising its key rates in order to temper the second-round effects of rising oil and food prices in the world market.
Economists said the magnitude 8.9 quake in Japan and the subsequent tsunami it triggered could damp activities in the world’s third-largest economy, result in slower global growth and soften commodity prices.
The Bank of Japan assured the payment system and trading infrastructure in Japan had not been affected by the twin disasters and would continue to function. What worries the economists is the power situation in Japan, following the shutdown of several nuclear reactors.
“We are confident in the resilience of the Japanese people and believe that any adverse effect on their economy would likely be temporary since reconstruction efforts will likely follow immediately,” said Tetangco.
“We are hoping that the global recovery will not be impeded but rather concerns will be focused in sharper relief towards climate and environmental issues, boosting instead those industries that are involved in these matters,” he added.
The Bangko Sentral chief also said the bank was reviewing its 8-percent growth forecast for remittances, in the wake of recent developments, including the growing tension in the Middle East and North Africa.
–Roderick T. dela Cruz, Manila Standard Today
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