Philippines: What the new central bank head means for markets

A new central bank governor, Benjamin Diokno, was appointed on 5 March (following the death due to illness of the previous incumbent) and concerns over a shift to an excessively loose (pro-growth) and less independent monetary policy prompted a 1% drop in the FX rate.

Diokno advocated fiscal expansion in his most recent stint, since June 2016, as Secretary of the Department of Budget and Management (the equivalent of the finance ministry in Philippines' presidential system). This leads some to fear that interest rates will be cut too fast to spur growth. Diokno attempted to allay this fear today in his public comments (reiterating the inflation target, suggesting it is too early to cut rates until inflation data supports this) but he will likely have to prove his prudent credentials. The next monthly rate-setting meeting is on 21st March (rates have been unchanged in the last three).

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