nestor a espenilla, jr : beginning a meaningful conversation - first coordination dialogue on developing the local debt market speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the local debt market development workshop, manila, 25 august 2017. * * * the securities and exchange commission, the bureau of treasury, and the bangko sentral ng pilipinas are no strangers to coordination and collaboration ( many of our achievements come from working together! ) and while this is not our first time to collaborate, it is the beginning of a new and meaningful conversation. today, we mark a milestone as we unveil the philippine roadmap for developing the local debt market. at the same time, we look forward to engaging in an initial discussion with market participants. this is a great time to begin this conversation! recently, our capital market was recognized as an emerging investment hub in asia by three major debt watchers – moody ’ s, standard and poor ’ s, and fitch. robust economic conditions coupled with government ’ s thrust to promote infrastructure create favourable conditions for capital market deepening. government ’ s vision of a “ golden age of infrastructure ” to support value - added output to the housing, manufacturing, connectivity and agricultural sectors is a game changer. 1 a deeper capital market will mobilize long - term savings for the financing requirements of these priority industries. moreover, gdp is projected to grow at 6. 8 percent in the medium term, with the inflation outlook for the next two ( 2 ) years manageable and within the government ’ s three ( 3 ) percent ± one percentage point target. our international reserves are at a level of eighty point eight billion us dollars ( usd80. 8b ) as of end - july 2017 — enough to cover eight point six ( 8. 6 ) months of imports and payments of goods and services. as if these are not encouraging enough, our discussion on capital market reform received support via technical assistance from the imf. the time is right to talk and take up reforms. colleagues and friends, it is our pleasure to start this conversation with you and to make local history. i am honoured to represent the bsp in this regard. sec commissioner ephyro amatong, treasurer of the philippines, rosalia de leon, representatives of the bankers association of the philippines ( bap ), headed by president nestor tan and bap open

productive capacity should be helped by robust business investment, improved labour productivity and higher immigration. putting this all together, the bank forecasts the canadian economy will grow 4¼ % this year, before moderating to 3¼ % in 2023 and 2¼ % in 2024. the bank ’ s primary focus is inflation. we are acutely aware that already - high inflation has risen further above our target. the invasion of ukraine has driven up the prices of energy and other commodities, and the war is further disrupting global supply chains. we are also concerned about the broadening of price pressures in canada. with about two - thirds of consumer price index ( cpi ) components growing above 3 %, canadians are feeling inflation across their household budgets, from gas to groceries to rent. 1 / 3 bis central bankers'speeches cpi inflation in canada hit a three - decade high of 5. 7 % in february, above what we projected in the january mpr. we now expect inflation to average almost 6 % in the first half of 2022 and remain well above our 1 % to 3 % control range throughout this year. we then expect it to ease to about 2½ % in the second half of 2023 before returning to the 2 % target in 2024. with inflation broadening and remaining higher for longer, the risk is that canadians start to think that high inflation will become entrenched. this brings me to my third point — interest rates are increasing. raising the policy rate is the main tool the bank has to moderate demand, prevent a persistent buildup in domestic price pressures and keep inflation expectations moored on the 2 % target. the economy can handle higher interest rates, and they are needed. increases in the bank ’ s policy rate raise the interest rates that banks and other lenders charge their customers. these include the rates on business loans, consumer loans and mortgage loans. with increases in the policy rate, interest paid on savings products will move up as well. by making borrowing more expensive and increasing the return on saving, a higher policy interest rate dampens spending, reducing overall demand in the economy. and with demand starting to run ahead of the economy ’ s supply capacity, we need that to happen to bring the economy into balance and cool domestic inflation. we also need higher interest rates to keep canadians ’ expectations of inflation anchored on the target, so that as global inflationary pressures from higher oil prices and clogged supply chains abate, inflation in canada falls back toward the target