The traditional channels of monetary policy transmission – the bank lending channel or the portfolio channel – essentially operate through the way banks’ balance sheets respond to monetary policy instruments. Even more fundamentally, banks are key counterparts for the operational implementation of monetary policy measures and play an important role in payment systems.
The timing and conditions of the BSP’s exit strategy will continue to be guided by the inflation and growth outlook over the medium term, the state of public health, and domestic and global risks to the economy. Economies with strong fundamentals tend to handle crises better.