A HIGHER interest rate environment will not curtail economic growth given ample liquidity in the financial system, the Bangko Sentral ng Pilipinas (BSP) chief said.
“Liquidity in the financial system … will cushion the economic impact of a tighter monetary policy environment,” central bank Governor Amando M. Tetangco, Jr. told reporters in a Friday evening interview.
“If there is credit, then these can be used to finance bankable projects and will further strengthen the economy,” he added.
The BSP’s policymaking Monetary Board last Thursday raised interest rates anew by another 25 basis points (bps), following up on a March 25 adjustment — also by 25 bps — to temper rising inflation.
Domestic liquidity — the amount of currency in circulation — rose to P4.2 trillion as of February, boosted mainly by overseas worker remittances as well as portfolio and direct investments, latest BSP data show.
Last Thursday, BSP Deputy Governor Diwa C. Guinigundo said capital inflows had substantially increased last month but declined to provide specifics.
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