The BSP is focused on inflation. 2. We will not hesitate to act pre-emptively if we believe the inflation target is at risk. 3. We are not wedded to a pre-set course of action. We will use available tools in our enhanced tool kit, as appropriate…. Now does that answer the burning question in your mind? A second issue is the Fed taper.
As sanguine as the future of the country may sound, we remain watchful of potential risks that could arise from the Fed’s actions. I am sure you have been following the issue of the Fed taper quite closely. As shown in the charts, movements of domestic financial instruments in May 2013, Q4 2013 and Q1 2014 exhibited volatility.