PH economy far from overheating, Bangko Sentral chief says

Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr. yesterday reiterated that the economy was far from overheating given the central bank policy and reform agenda that had been keeping it competitive.

Comparing the economy to a race car, Espenilla told reporters in a text message that “we are working hard to run our economy competitively so it finishes a winner.”

“We are talking about careful preparation, regular tune-ups and upgrades, skillful driving and constant monitoring. The engine is expected to get hot along the way. That’s what running engines do. But there’s a huge difference between a hot engine and an overheated engine. If we don’t like hot engines, we should keep our car parked,” Espenilla said.

He said the BSP “spends a lot of time understanding the economy… developing a dynamic game plan, and executing effectively, so the economy doesn’t overheat.”

“We do this systematically and regularly every six weeks,” he said, referring to the BSP’s formal review of the monetary policy stance.

“The policy tool kit of the BSP is not just monetary policy. Don’t forget its considerable supervisory powers over the banking and financial system to prevent imprudent and reckless behaviors in individual entities and sectors that lead to unsustainable risk buildups,” Espenilla said.

Also, Espenilla said the BSP had strategic long-term financial sector reforms covering domestic capital markets, foreign exchange markets, payment systems, financial inclusion and literacy.

These are aimed at making the overall financial system function efficiently, resiliently and responsibly. —BEN DE VERA