Lastly, there is the challenge of keeping an eye out for signs of excessive credit and leverage in the financial system. While we continue to see the Philippine banking system as currently being in a position of relative strength... nevertheless, we need to push for necessary financial sector reforms to propel us towards a more sound, stable and inclusive financial system.
Monetary policy does not have an effect on the supply side, but can work to ensure demand is stronger than it otherwise would be. Lower interest rates will provide more disposable income to the household sector and those businesses with debt.