Deutsche Bank

these developments, we no longer see the BSP raising rates for the rest of 2017,” it said.

“If anything, we believe the BSP could use this window of benign - ment ratio...,” it added.

The reserve ratio is the proportion of current deposits that banks need to keep with the Bangko Sentral, against the sum that they can loan out to borrowers.

Since May 2015, the monetary authority has maintained the reserve requirement ratio at 20 percent to prevent a rapid increase in liquidity and credit expansion, which could threaten the stability left unchecked.

ratio can be lowered especially in the case wherein domestic liquidity tightens following resident depreciation, as may be triggered by the continued normalization of US monetary policy.

“This may be what the new BSP Governor [ Nestor Espenilla Jr.] had in mind when he remarked that the deceleration in consumer tune its monetary instruments,” the German bank said.

Latest data showed that do- mestic liquidity or the amount of system expanded slightly by 11.3 percent in May, from April’s 11.2 percent rise, to P9.6 trillion. The central bank said demand for credit remained the principal driver of money supply growth.

Meanwhile, foreign portfolio investments to the Philippines in reversing the $593.87 million in certain domestic and international developments, such as the US air strike against Syria, global terrorist attacks, interest rate increases by the US Federal Reserve, political turmoil in the US, and the closure order for several mining companies in the country,” according to the central bank.

The Philippine peso, meanwhile, has been trading above the psychological level of P50:$1.

increases in term deposit rates could signal a reserve requirement cut.

In the term deposit auction last Wednesday, the interest rate for the seven-day facility rose to 3.2189 percent from 3.1648 percent, while the 28-day tenor fell to 3.4892 percent from 3.4909 percent.