Clarity of Policy Intent I have always believed that the BSP is more effective when you understand us – not just what we do, but why we do it – especially at a time like this where there is so much confusion. "Is the central bank still an inflation-targeting central bank, or has it become an exchange rate-fixing central bank?"
Because-if you are fixing the exchange rate, then your interest rate is [equivalent to] the US interest rate plus the risk premium. In the absence of risk, like depreciation, [and] because no country ever defaults on its own currency, then we just go to where it is [the interest rate] higher, as shown in Hong Kong.