the latest in a series of publications under the bangko sentral ng pilipinas. on central banking, our earlier books include “ money and banking in the philippines – perspectives from the bangko sentral ng pilipinas, ” the next was “ the bsp and the philippine economy ” followed by central banking in challenging times. we have also published annotated books on “ the new central bank act, ” “ the general banking act ” and the “ special banking laws. ” this latest book on central banking compiles in one volume the challenges we faced over the past decade and how we managed the evolving conditions, all for the singular purpose of coming out better than before. the charts and tables provide us a succinct view of the myriad of details before us but it is the accompanying narrative from our subject matter experts that allow readers a front row view of our operations and our resulting track record. 1 / 3 bis central bankers'speeches central banking in perspective perhaps more than most, central bankers appreciate the dynamics that is inherent with time. after all, the decisions we take with respect to monetary policy will take several quarters to fully take effect. thus, our actions today are based on the evidence over the recent past, but our policy stance is always directed towards the future. on the part of banking policy, we craft regulations and guidelines to influence prudent behavior within an enabling environment. the actual impact of this regulatory framework will also take time to develop, both on the operating condition of banks and on the well - being of financial consumers. in other words, ladies and gentlemen, this book reflects the outcome of the interaction of the central bank with the banking industry and other sectors of the economy. simply put, this is our story. our journey to stability has been challenging but with the support and collaboration of our key stakeholders we continue to reap the benefits from our past actions and decisions that have been strategic. thus, even as international crises afflicted the global economy and roiled markets with volatility, the philippine economy continued to grow as sound monetary and banking policies provided a stable environment for our economy – we have low inflation, a sound and stable banking system as well as a safe and reliable payments system. we beefed up our macroeconomic analysis and surveillance tools, introduced crucial and timely reforms such as the interest rate corridor framework, and increased public engagement in our policymaking process. at the same time, bsp and the banking industry continued to pursue a broad

the domestic economy. in addition, the domestic economy has sufficient buffers that help weather the external headwinds : • the bsp ’ s foreign exchange ( fx ) reserves currently stands at us $ 85. 5 billion as of end - july 2016, more than enough to meet the country ’ s fx liquidity requirements for trade and short - term debt obligations. • the country ’ s current account has been in surplus for 13 consecutive years now, supported by the sustained increase in overseas filipino ( of ) remittances, as well as business process outsourcing ( bpo ) revenues and tourism receipts. current stance of monetary policy this position of relative strength has allowed us to keep our policy rates at 4 % since september 2014 until we reduced it to 3 % in june this year, following the operational adjustment when we adopted the interest rate corridor. however, even with the 100 bps adjustment in the headline rate, 3 % is still over 250 basis points higher than the fed funds target rate. that gives us significant wiggle room, in this environment where some jurisdictions have gone into negative interest rate territory. at our policy meeting last week, we again kept the policy rate steady at 3 %. while our assessment showed that inflation would be slightly below the ng target range for 2016, we expect that inflation would be within the target of 2 – 4 % in 2017 – 2018, with an upside bias for 2017. in addition, our credit growth suggests favorable monetary conditions, and aggregate demand remains firm. therefore there was no strong impetus for us to move policy levers or adjust the stance of monetary policy. summers, l. ( 2016 ). “ the age of secular stagnation. ” foreign affairs. february issue. bis central bankers ’ speeches in other words, ladies and gentlemen, we have monetary policy space and our current monetary settings are appropriate. triggers to shifts in policy stance you must have heard me say this on a number of occasions already. but you may ask, what would cause us to change the stance of policy? my answer to that would be : our next move would be data dependent. which then begs the question, what data are we looking at? data dependence sounds almost trite. some may say this is veiled “ central bank speak ”, given that nearly all central bankers today seem to say this in unison. but in truth, when we speak these words, we do so with great thought and much humility. for we do not know everything. it would