Latest Stories

SDA rate cut to 2%

BSP keeps overnight borrowing cost at 3.5%


Dispelling speculation that growing domestic liquidity could lead to asset price bubbles and overheat the economy, the Bangko Sentral ng Pilipinas is effectively pushing more money into the system by cutting the interest rate on special deposit accounts (SDAs) by another 50 basis points.

In its policy rate-setting meeting Thursday, the Monetary Board of the BSP decided to cut the SDA rate from 2.5 percent to a new historic low of 2 percent. At the same time, it kept its overnight borrowing—the key policy rate—at 3.5 percent and overnight lending at 5.5 percent.

This is the third time this year that the BSP slashed the SDA rate. The first was in January, followed by another reduction in March. Each of the two previous rate cuts was by 50 basis points.

While the rate reduction could push money out of the central bank’s SDA facility and circulate in the economy, it is also seen to help temper foreign-exchange inflows and prevent a steep appreciation of the peso as the lower yield makes SDAs less attractive to foreign portfolio investors.

The BSP has been mindful of any excessive appreciation in the value of the peso after the local currency’s significant appreciation last year elicited complaints from exporters.

BSP Deputy Governor Nestor Espenilla Jr. said in a briefing Thursday that the rate cut aligned monetary policy in the country with international standards wherein interest rates offered on deposit facilities were way lower than the key policy rates of central banks.

“The adjustment is in line with the BSP’s continuing efforts to fine-tune its monetary policy instruments,” Espenilla said.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: asset price bubbles , Business , economy , interest rate , liquidity , special deposit accounts

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Businesswoman allegedly killed by husband, brother-in-law
  • Roxas suspended from golf club for outburst over P5,000 guest fee
  • SC reschedules oath-taking of new lawyers
  • Ex-COA chief seeks bail after arrest for plunder
  • Aquino expects more from new Air Force chief ‘since I know him so well’
  • Sports

  • Guiao fined P100,000 for ‘mongoloid’ comment vs Meralco forward
  • Hawks and Grizzlies revel in home wins
  • Floyd: Manny’s power gone
  • Michael Phelps loses to Lochte in comeback meet
  • Sharapova advances to Stuttgart quarterfinals
  • Lifestyle

  • ‘Recovered’ Banksy works on display ahead of sale
  • Marinduque: Visiting the ‘palm of the ocean’
  • First at Vatican in 60 years
  • How Jing Monis Salon gave Krissy the pixie
  • Want to be a supermodel? Work on your inner beauty, says Joey Espino
  • Entertainment

  • Paul McCartney to play at Candlestick concert
  • Kristoffer Martin: from thug to gay teen
  • Has Ai Ai fallen deeply with ‘sireno?’
  • California court won’t review Jackson doctor case
  • Cris Villonco on play adapted from different medium
  • Business

  • PAL hailed for ban on shark fin cargo
  • BSP to change tint of P100 bill
  • Nielsen sees car buying boom in the Philippines
  • How author of best-seller exposed ‘one percent’ economic elite
  • Bangko Sentral readies new bank lending rules
  • Technology

  • Cloud strength helps Microsoft earnings top Street
  • Vatican announces hashtag for April 27 canonizations
  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • Opinion

  • Corruption not invincible after all
  • Editorial Cartoon, April 25, 2014
  • No deal, Janet
  • Like making Al Capone a witness vs his gang
  • MERS-CoV and mothers
  • Global Nation

  • Plane lands at Bali airport in suspected hijacking—Indonesia air force
  • Obama lands in Seoul as N. Korea nuclear test fears grow
  • Militant protests vs Obama, US set
  • Filipinos second-shortest in Southeast Asia
  • China welcomes PH apology
  • Marketplace