has unwound much of its post-crisis monetary accommodation
. Aided by a massive infusion of fiscal stimulus through tax cuts and government spending increases, the Fed lifted its policy rate from near-zero levels in 2015 to just below 2.5 percent by the end of 2018.
Finally, a few participants expressed concerns that further monetary accommodation
presented a risk to financial stability in certain sectors of the economy or that a reduction in the target range for the federal funds rate at this meeting could be misinterpreted as a negative signal about the state of the economy."
In his earlier statements, Diokno -a known pro-growth BSP governor-said the need for further monetary accommodation
will depend, in part, on how strongly the Philippines's growth drivers 'kick into higher gear.'
He said the need to assess further monetary accommodation
will depend on how strong growth drivers will be although he clearly expects "steady recovery in household spending as commodity prices continue to stabilize."
Nevertheless, what president Mario Draghi last month said an "ample degree of monetary accommodation
" has not been enough to counteract forces braking economic growth and holding inflation back from the ECB's target of just below 2.0%.
Continued low inflation opens the possibility for central banks to increase monetary accommodation
to support economic activity should it be required.
As we noted previously, we believe it would be most prudent for the BSP to wait until inflation is more firmly within its target before engaging in any monetary accommodation
," Arbis said.
'That said, the case to provide greater monetary accommodation
is warranted as long as inflation continues to moderate as expected,' Arbis said, noting that the country's growth would slow to 6 percent this year given a prolonged impasse on the 2019 fiscal budget and a looming ban on new public works spending ahead of the midterm elections.
Investors who are not prepared for this shift from the recovery era of monetary accommodation
to the expansionary post-quantitative easing era may be exposed to significant risks, in our view.
The Governing Council intends to reinvest the principal payments from maturing securities purchased under the APP for an extended period of time after the end of the net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation
interest rates and tariffs calls for more monetary accommodation