Don’t telegraph monetary bias ahead of policy meeting, officials told

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has called for a “quiet period” before each scheduled monetary policy meeting—a reminder that coincided with the peso’s weakness, which some market watchers partly attributed to dovish signals from some officials.

In an email sent to journalists on Friday, the BSP said the release of information related to current or prospective monetary policy issues and decisions must be made within seven calendar days before the official announcement of the decision to the public.

The central bank governor is the only official who may speak about the current monetary policy issues or prospective monetary policy decisions during the quiet period, with the concurrence of the Monetary Board (MB), the highest policymaking body of the BSP.

Unless authorized by the governor, MB members, deputy governors, and senior BSP officers must not accept any media interviews or speaking engagements on monetary policy issues during the quiet period.

“Forward guidance requires the BSP to exercise transparency, to be consistent in its messaging, and to project a single voice to the public when communicating the intention and direction of monetary policy,” the central bank said.

“To enhance this policy tool, the BSP shall adopt a quiet period,” it added.

Less talk, less mistakes

The reminder from the central bank coincided with the bearish sentiment on the peso, which has fallen to 19-month lows and is inching closer to the record-low 59-level against the US dollar.

While most market watchers blamed the volatility on a hawkish US Federal Reserve, some observers said such a weakness could also be due to dovish remarks from some central bank officials recently.

Governor Eli Remolona Jr. last month floated the possibility of two 25-basis point rate cuts this year—with the first one likely in August and ahead of the Fed.

READ: BSP hints at policy rate easing by August

Meanwhile, Finance Secretary Ralph Recto, who represents the Marcos administration in the MB, said a rate cut in the third quarter is “very much possible.”

“Well, as the saying goes, less talk, less mistakes,” said Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines.

“Central banking work is critical, and communication, an effective one, is very crucial,” he added.

For Robert Dan Roces, chief economist at Security Bank, the BSP’s decision to implement a quiet period “will help minimize confusion and speculation.”

“It’s a seven-day pre-meeting period, so that means they can be bearish or hawkish all they want prior to that,” Roces said. —IAN NICOLAS P. CIGARAL