Planned 50 bps cut in rates enough for now

MANILA – A 50-basis-point reduction in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates is enough for this year so far vis-àvis the projected impact of the coronavirus disease 2019 (COVID-19), BSP Governor Benjamin Diokno said Friday.

In a press briefing, Diokno said that based on their assessment, the virus would have limited impact on this year’s domestic expansion at an average of 0.3%.

He cited his earlier statement on the plan to slash the central bank’s key policy rates by 50 basis points this year.

Last February 6, the policy-making Monetary Board reduced the BSP’s key rates by 25 basis points, the first for the year, as inflation is forecast

to remain within target and domestic growth remains firm.

The rate of price increase rose to 2.9% last January from the previous month’s 2.5%.

Monetary officials forecast this year’s inflation to average at 3%, right between the government’s 2% to 4% target band.

Relatively, growth, as measured by the gross domestic product, rose to 6.4% in the last quarter of 2019 from the previous quarter’s 6%.

Diokno said they already delivered half of their planned rate cut this year and the next one will either be in the second quarter or the second half of the year.

“At the moment, I don’t see the need for monetary easing other than what we’ve done. We are happy where we are right now,” he said.

Diokno, however, added that “we could change the estimate depending on more information (on COVID-19).” (PNA)