Diokno: No more policy rate cut for 2019
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno on Tuesday said there would be no more policy rate cut this year even as banks’ reserve requirement ratio (RRR) might still be reduced before 2019 ends.
On the sidelines of The Asset’s 14th Philippine Forum, Diokno said the BSP was done with its rate reduction.
The BSP’s policy-setting Monetary Board will still have two more meetings to discuss the monetary policy stance this year, slated for Nov. 14 and Dec. 12.
As for the RRR, Diokno said there remained a possibility that it would be further reduced by December.
He said they would consider third-quarter gross domestic product growth data, the November inflation rate and the International Monetary Fund’s World Economic Outlook report in deciding on whether to slash the RRR again.
In his speech at The Asset forum, Diokno said that “should the inflation outlook continue to improve, we will further cut the RRR until it reaches single digit by the end of my term in 2023.”
Last month, the Monetary Board cut the policy rate by 25 basis points to 4 percent and announced that the RRR would be reduced by another 100 bps—a follow-through to the earlier 200-bp reduction.
So far this year, the BSP has already reduced interest rates by 75 bps amid easing inflation.
Last year, the BSP hiked its policy rates by a total of 175 bps to 4.75 percent as inflation hit a 10-year high of 5.2 percent amid higher excise taxes slapped on consumption under the Tax Reform for Acceleration and Inclusion Act, skyrocketing global oil prices, and domestic food supply bottlenecks.
As of end-September, inflation averaged 2.8 percent, within the government’s 2-4 percent target range, as the rate of increase in prices of basic goods fell to a 40-month low of 0.9 percent year-on-year last month.
