Philippines Considers Interest Rate Cuts Amid Declining Inflation and Economic Stability
The Governor of the Bangko Sentral ng Pilipinas (BSP), Eli Remolona, announced that further interest rate cuts are being considered, stating that the central bank may lower rates by 25 basis points at a time, with the possibility of a larger cut if the economy experiences an unexpected slowdown.
Speaking at an economic forum on Tuesday, Remolona emphasized that inflation is on the right track, allowing room for gradual adjustments in monetary policy.
In its last meeting, the BSP decided to keep interest rates unchanged despite market expectations for a cut. This decision was driven by economic growth slowing below the government’s target, amid ongoing global economic uncertainty.
Additionally, the BSP’s Monetary Board recently decided to lower the reserve requirement ratio (RRR) for banks from 7% to 5%, effective March 28. This move is expected to inject 300 billion pesos ($5.24 billion) into the financial system. Remolona also indicated that further reductions in the reserve requirement could be considered in future meetings.
The next policy meeting is scheduled for April 10, following the release of March inflation data on April 4. These figures will play a crucial role in shaping the central bank’s next steps. Notably, inflation dropped sharply to 2.1% in February, falling below the BSP’s target range.
