‘BSP policy easing may resume in Jan’
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Tue, 03 Dec 2019 16:25:58 +0000
MONETARY policy easing in the Philippines could resume as early as January, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
“We’ll look at December [data] and then, maybe [in] early January, we’ll resume monetary easing,” Diokno told reporters on Monday night.
He clarified, however, that the policy easing would be implemented in both the key interest rates and banks’ reserve requirement ratio (RRR).
The central bank’s policy-making Monetary Board has implemented a combined 75-basis-point (bps) interest rate cut in May, August and September. This brought overnight borrowing, lending and deposit rates to 4 percent, 4.50 percent and 3.50 percent, respectively.
It also reduced the RRR by a combined 400 bps this year.
RRR is the proportion of current deposits that banks need to keep with the central bank against the sum they can loan out to borrowers.
Stressing that the BSP remains data-dependent, Diokno earlier said it was still “possible” that the board would make another interest rate cut at its last meeting on December 12 if developments permit.
At its November 14 meeting, the Bangko Sentral said the board believed that prevailing monetary policy settings remained appropriate.
“This is supported by the benign inflation outlook and a firm outlook for domestic economic growth,” it added.
According to the central bank, its latest baseline forecasts continue to indicate that inflation is likely to settle within the lower half of the target band of 2 to 4 percent this year.
“Upside risks to inflation over the near term emanate mainly from the potential impact of the African swine fever outbreak on food prices and from potential volatility in oil prices amid geopolitical tensions in the Middle East,” the BSP said.
“At the same time, weak global economic prospects continue to temper the inflation outlook, as uncertainty over trade policies weigh down on global economic activity and demand,” it added.
The Bangko Sentral also said a prudent pause in monetary adjustments would enable the reduction in policy rates and RRR to continue working their way through the economy.