The president’s choice will steer the central bank after an aggressive monetary tightening campaign to quell inflation that remains elevated. — Bloomberg
MANILA: Investors are bracing for Philippine President Ferdinand Marcos Jr’s choice on who will head the central bank in the next six years, with analysts seeking policy continuity.
Marcos will determine the Bangko Sentral ng Pilipinas’ (BSP) leadership in the coming weeks, as governor Felipe Medalla’s term is set to end by July 3.
The president’s choice will steer the central bank after an aggressive monetary tightening campaign to quell inflation that remains elevated.
“Someone who could uphold the tenets of an independent central bank and who has the appropriate experience in the conduct of monetary policy, financial supervision and financial stability would be a good fit for the role,” said Domini Velasquez, chief economist at China Banking Corp.
The 73-year-old governor was appointed by Marcos last year to finish the term of Benjamin Diokno, who moved from the central bank to head the Finance Department.
Medalla has led the BSP in raising its policy rate to a 16-year high in the past year, as domestic and global headwinds pushed inflation way beyond the central bank’s 2%-4% goal.
His latest signals point to an extended pause on policy moves as price pressures ease, propping up the Philippine peso.
“A change of BSP leadership after just a year would be disruptive, particularly after Medalla’s forward guidance has helped guide market expectations about near-term BSP policy direction,” said Alvin Tan, head of Asia forex strategy at RBC Capital Markets in Singapore.
Under Medalla’s watch, the central bank has managed to keep stability in the local currency market after the peso briefly slumped to a record-low 59 against the dollar in October 2022. — Bloomberg
