Scribd
Upload
32 views

BSP Notes 2nd Session

This document discusses the implementation of the Bangko Sentral ng Pilipinas' (BSP) monetary policy and the transmission mechanism of how the BSP's policy rate affects the real economy. There are two main sources of inflation: demand-pull, which is driven by increases in demand, and cost-push, which is driven by increases in production costs. The BSP's most important monetary policy instrument is the policy rate or reverse repurchase facility rate. Changes to this rate are transmitted to the real economy through various channels such as interest rates, credit, exchange rates, wealth, and expectations. The transmission mechanism provides an additional layer of analysis for how the BSP's monetary policy decisions impact inflation.

Uploaded by

Jamela Oriel
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
32 views

BSP Notes 2nd Session

This document discusses the implementation of the Bangko Sentral ng Pilipinas' (BSP) monetary policy and the transmission mechanism of how the BSP's policy rate affects the real economy. There are two main sources of inflation: demand-pull, which is driven by increases in demand, and cost-push, which is driven by increases in production costs. The BSP's most important monetary policy instrument is the policy rate or reverse repurchase facility rate. Changes to this rate are transmitted to the real economy through various channels such as interest rates, credit, exchange rates, wealth, and expectations. The transmission mechanism provides an additional layer of analysis for how the BSP's monetary policy decisions impact inflation.

Uploaded by

Jamela Oriel
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 9

Implementation of the BSP’s Monetary Policy and Transmission mechanism of the BSP’s

policy rate to the real economy

Arnel Adrian C. Salva


Deputy Director l Economic and Financial Learning Office

Price Stability
- Low and stable inflation
Based on Literature, there is 2 major sources of inflation:

Demand-pull
- Hinahatak pataas ng demand ang inflation.
- Consumer ay yumayaman,
- Money is link with demand; has money, wish to buy something becomes demand.
Capable to buy
- Availability of money, and cost of borrowing money.
- May magagawa BSP through monetary policy.

Cost-push
- Nagpapataas sa presyo sa bilihin ay galing sa cost of production or supply factors.
- Demand is steady, but something happens sa supply (can be tumaas o bumaba)
- Example: bagyo; crops – nagmahal because sa supply.
- Wala magagawa BSP.
Excessive money supply (first scenario)
Negative growth spiral

Only need right amount of money in circulation.


Most important instrument is Policy Rate or RRF (Reverse Repurchase Facility)

Dito dumdaan sa channels before maapektuhan demands that will lead to inflation.

Interest rates = loan applications financial investments.


Credit = taas utang, taas cost of borrowing; less wealthy.
Exchange Rate = when it increasrs, attracts more investment
- More foreign exchange comes in, peso will appreciate and lessen inflation
Wealth = financial assets = tataas interest rate, future value will come down.
Expectations = if you feel na tataas inflation, action will be geared towards it. Tataasan ang
price, you can cause inflation.
Monetary Authority – BSP

Nagdagdag one layer sa analysis, which is the transmission mechanism


Second quarter nagrerecover cos we lost a lot sa previous quarters.
11.8% growth sa second quarter; recovering lang, wag mabigla sa laki percentage.

You might also like