fed officials and what the fed will ultimately end up doing. over the jackson hole weekend, bill dudley of the new york fed said in an unscheduled interview that a september hike is “ less compelling ” now. for her part, esther george of the kansas city fed who has repeatedly called for a hike, said “ it ’ s too soon to say that recent market developments have altered the fundamental view ” that the economy is prepared for normalization. then stan fischer, fed vice chair, spoke at a panel saying “ there is good reason to believe inflation will move higher ”, thus keeping the door open for a september hike. can anyone really tell with certainty when and by how much the fed will tighten? some are of the view that while a september lift off may not seem prudent, given market volatility, it may just be what the market needs in order to eliminate one element of uncertainty, after all, monetary policy has significant lags. 2. the next steps of chinese authorities – whether they will continue to intervene, to what extent, in what form, and how such intervention will be funded. some analysts put the cumulative decline in chinese reserves since july to be over $ 300b. question is, will they sell more us treasuries to fund intervention? and if so, how will that impact on the us yield curve, and the fed ’ s projected path of normalization? bis central bankers ’ speeches 3. what the ecb still has up its sleeves – how dependent these next moves would be on the behavior of its members, such as greece. 4. how the combination of these factors will be accounted for in the reaction functions of the other central banks and how these will ultimately all work themselves out in the currency, bond and commodity markets, and 5. what would happen to global growth if china slows down significantly, and if the touted us growth ends up to be a “ false ” start. what or where then would be the engine for global growth? what concerns bsp the most? i have been asked, what is it that the bsp is most concerned about. of all the risks i ’ ve listed just now, which would influence monetary policy the most? ladies and gentlemen, it is very hard to say, with any degree of certainty, which factor would affect domestic monetary policy more, because, all these factors are interrelated. therefore, for the rest of the time that has been given to me, let me

amando m tetangco, jr : animal spirits in a period of volatility speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the bloomberg fx forum, makati city, 2 september 2015. * * * good afternoon ladies and gentlemen. fortuitous or good planning? someone in bloomberg must be psychic, to have chosen “ hedging world volatility ” as theme for its 2015 fx forum and at the same time to have scheduled the forum in manila during this precise week. was that sixth sense or “ bread and butter ” excellent market reading? how do you hedge in a volatile market? indeed, market volatility of late has not been contained to just a few countries or jurisdictions. it has neither been restricted to just either advanced or emerging markets, but it has spanned all categories of countries. and volatility has not been concentrated in one market or asset class alone, but it has crossed over from the commodity to the financial, and to some extent, the real goods market as well. with the variable forms of feedback loops and the uneven transmission mechanisms in the macrofinancial system, the relationships and correlations – as predicted by traditional models – appear to no longer be valid. therefore, the question of how to “ hedge ” world volatility – as intimated by the theme of this forum – is quite well timed. for those of you who have been in the market for a while now. a quick look around the room tells me, there aren ’ t too many of you around today. perhaps, a sign of the changing times? those of you who have already seen a number of episodes of volatility in “ your day ”, may be saying, this is a “ healthy ” correction. to a degree, i ’ ll have to agree with that. this “ correction ” is one good positive that is falling out of the recent market price action. we needed a tap on the brakes, so to speak, because the markets had been following one strong underlying trend for a while now, seemingly oblivious to other factors. each time we come to a crossroads such as this, analysts would say we are in “ uncharted ” territory. i also cannot disagree with that. for certain, no one can be absolutely sure about a few things : 1. the convergence between the recent pronouncements of various