Investors are on the lookout for a possible cut in banks’ reserve requirement ratio (RRR), a move that could free up more cash for loans, thus helping spur spending.
RCBC chief economist Michael Ricafort said that among the upcoming catalysts for the equities market to break free from a previous slump was a potential cut in the RRR—“one of the options to ease monetary policy other than a local policy rate cut.”
He noted that for every 1 percentage point cut in large banks’ RRR, about P130 billion would be infused into the financial system.
RRR reduction considered
Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla previously said they were considering an RRR reduction to allow banks to lend more to small and medium enterprises.
RRR currently stands at 12 percent for universal and commercial banks.
For the Philippine Stock Exchange index, Ricafort pegged the resistance level within 6,900 to 7,000 and the support level at the 6,510 territory.
On Friday, the benchmark index rose by 0.54 percent, or 35.91 points, to close at 6,664.55 while the All Shares index climbed by 0.39 percent, or 13.73 points, to settle at 3,548.37.
It was supported by the BSP’s move to pause interest rate adjustments. The central bank kept the policy rate at 6.25 percent amid a lower inflation projection for the year.