Bangko Sentral preempts Alan Greenspan

This is one experiment that central bankers in Asia should follow closely: The Monetary Board of the Philippines has pre-empted a possible US Federal Reserve interest rate cut .

The brave reduction of the Bangko Sentral's central bank key interest rate by 50bp cut, adopted during the March 8 regular board meeting, was unexpected.  BSP Governor Rafael Buenaventura has been firm in his policy of lowering interest rates, but timing has always been patterned after that of the US monetary policy.

This time, the Bangko Sentral proactively lowered rates without waiting for the results US Federal Reserve committee meeting scheduled for March 20. Newly appointed National Treasurer, Sergio Edeza has favored a pre-emptive rate cut, while Buenaventura earlier indicated he would rather wait for the US monetary action.

The day after the announcement, the stock market closed 1.18 points lower at...

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