Home Business News Reduction in key rates may happen ahead of another RRR cut

Reduction in key rates may happen ahead of another RRR cut

By Joann Villanueva

 

MANILA — Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno on Wednesday said a reduction in the central bank’s policy rates may happen ahead of another cut in banks’ reserve requirement ratio (RRR).

In an interview after the awards ceremony and appreciation lunch for stakeholders at the BSP office in Manila Wednesday, he expressed openess for another cut in the RRR after it was reduced last May.

BSP’s policy-making Monetary Board (MB) decided to slash by 200 basis points the RRR of universal and commercial banks (U/KBs), thrift banks’ (TBs) and non-bank financial institutions with quasi-banking function (NBQBs) on staggered basis effective May 31, 2019 (100 basis points), June 28, 2019 (50 basis points) and July 26, 2018 (50 basis points).

To date, U/KBs RRR is at 16 percent, still high compared to other countries in Asia.

The RRR of demand deposits and negotiable order of withdrawal (NOW) accounts of rural and cooperative banks were, in turn, slashed by 100 basis points effective May 31, 2019.

Relatively, the MB slashed by 25 basis points the BSP’s key policy rates last May. The overnight reverse repurchase (RRP) rate is now at 4.5 percent.

The MB will have its fifth rate setting meet for the year on August 8 and Diokno said among to major data they will assess are the July 2019 inflation report and the second quarter growth report for the domestic economy.

“Those are the important metrics,” he said.

The Philippine Statistics Authority (PSA) releases the inflation rate report of a certain month on the fifth day after the said month.

On the other hand, it releases the domestic growth output report two months after a specific quarter.

Analysts continue to forecast more reduction in the BSP’s key policy rates this year especially after the June 2019 inflation declined to 2.7 percent after an uptick to 3.2 percent in the previous month.

Domestic inflation peaked at 6.7 percent in September and October 2018 and has decelerated since then except for an increase from three percent last April.

Last year, the MB increased the BSP’s key policy rates by a total of 175 basis points in a bid to help rein in inflation. (PNA)

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

MUST READ

GMA programs and personalities win ALTA Media Icon Awards

Several GMA shows and personalities won awards in the 5th ALTA Media Icon Awards of the University of Perpetual Help this year. Honored were Kapuso...

Tokyo praises Yulo’s ‘outstanding’ share to PH-Japan friendship

By Joyce Ann L. Rocamora   MANILA -- Gold medalist Carlos Yulo on Thursday received a commendation from the Japanese Embassy in Manila for his historic win...

PCSO donates 45 ambulances to gov’t hospitals, health facilities

By Christopher Lloyd Caliwan   MANILA -- The Philippine Charity Sweepstakes Office (PCSO) on Thursday turned over 45 new ambulance units to various government hospitals and health...

DepEd ‘strongly condemns’ slay try on Bukidnon teacher

By Joyce Ann L. Rocamora   MANILA -- The Department of Education (DepEd) on Thursday strongly condemned the shooting of Zhydee Bitago Cabañelez, an elementary teacher at...

PH soldiers bag silver medal in UK Cambrian Patrol

By Priam Nepomuceno   MANILA -- Eight Philippine Army (PA) Scout Rangers, who participated in the United Kingdom's Exercise Cambrian Patrol 2019 (Ex CP 2019) held in...