| BSP: Monetary Board Cuts Policy Rates
The BSP should cut
the policy rate because the inflation rate which is 2.8 is lower than the 3-5
percent target of the government. Lower interest rates serve as an incentive to
attract investments and borrowers so that money would not be stagnant. More
investments would come and it would trigger the economy to boom for example
more employment would be available, more development would be done and more
there will be uplift in the economic condition of the country that will benefit
all of its stakeholders and stockholders so that we are not dependent to other economy. ”Latest
baseline forecasts indicate that inflation is likely to settle within the lower
half of the 3% to 5% target for 2012 and 2013, as pressures on global community
prices are seen to continue to abate amid weaker global growth prospects,"
it added. The monetary officials' decision was not exactly a surprise after BSP
Governor Amado Tetangco hinted that the continuing low inflation provides room
for a rate cut.
Policy makers watch
inflation since low interest rates tend to make money easier and borrowing
cheaper, thus there is more money in an economy. As a textbook altruism, people
tend to spend more when an economy is awash with money, in effect driving up
the cost of goods and services. Low interest rates are meant to spur economic
growth by encouraging businesses to borrow for their expansion needs, and for
citizens to invest in capital assets, including cars and real estate
properties. Therefore, given the circumstances and factors affecting the cut in
policy rates will be slightly/moderately dependent on the value arising from
inflation rate and the factors coming from the unstable global economy.
Furthermore, the
Philippines deserve a positive investment grade rating. Philippine economic
development is very visible on line with the positive expectation with the
current administration.
- It would attract more foreign investments. Because the foreign investors wants a good rating before they invest in the country.
- It would boost your currency. The upgrade has already propelled the Philippine peso to 41.72 against the US dollar, the local currency’s strongest showing in four years.
- The credit upgrade increases the likelihood that the Philippine economy would grow bigger this year compared to last year.
On the positive note positive credit rating can drive
job-generating foreign direct Investments, lift incomes, and reduce poverty and
that a country is strong and stable and have a confidence that debt would be
settle with not much big issues. But this rating can be abuse just like the
cause of recession in America wherein they use their asset in many loans and
soon after they collapse. Credit rating is a countries asset to borrow money in
international community, if this borrowing will not be mobilized properly. It
can be abuse and leads to a bigger problem just like before with the time of Marcos.
On the negative note since credit rating determines country’s stability
overseas transaction may also be affected in a positive side its good but on
the other hand this might trigger to OFWs remittance transaction which we all
know that it is one of the Philippine’s pillars of economics stability and
growth. Last, the gross international reserves (GIR) which indicates a
country’s wealth of foreign exchange and determines its ability to pay for
imported goods, pay debts to foreign creditors and engage in other commercial
transactions with the rest of the world and the Philippines GIR reached a record
high of about $77 billion earlier this year. But with the other developing
countries starting to have recession just like US and Europe the GIR may
collapse greatly and will immediately decline economic activity. If your grade
rating is positive many investor will be investing in our country and many Filipino citizen will have works and it will boost our economy.
