No more BSP rate cuts for ‘19 but…

MANILA – Philippine monetary officials are done with policy rate easing this 2019 but may possibly slash banks’ reserve requirement ratio (RRR) if inflation

decelerates further. In an interview Tuesday with journalists after his speech at The Asset forum in Taguig City, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the 75 basis points cut in the central bank’s key rates will be “all” for this year. However, Diokno said they will consider incoming economic data on inflation and gross domestic product (GDP) vis-à-vis the RRR. Last September, rate of price increases decelerated to 0.9 percent from 1.7 percent in the previous month due to slower rate of the heavily-weighted food and non-alcoholic beverages index, as well as the transport index, due to drop in oil prices. In the first nine months this year, inflation averaged at 2.8 percent, which was at the lower half of the government’s 2 percent to 4-percent target band until 2021. Except for the uptick to 3.2 percent last May from 3 percent last April, inflation has been decelerating after it peaked at 6.7 percent in September and October last year. This allowed the BSP’s policy-making Monetary Board (MB) to reduce key rates following the 175 basis points increase last year to help reign in the supply-side affected inflation rate. Diokno said he hopes to reduce banks’ RRR to single-digit by the end of his term in 2023. “We are looking at the data. Kung pwede pa bakit hindi? (If we can slash it (the RRR) more, why not?),” he added.