Diokno opens door to more policy rate cuts

The Bangko Sentral ng Pilipinas (BSP) on Wednesday opened the door to more policy adjustments after a 25-basis-point reduction earlier this year.

“We have a lot of policy space, considering the global trend of monetary easing. Nauna na nga ‘yung Australia ngayon. Even the US is easing,” BSP Governor Benjamin Diokno told reporters.

The Reserve Bank of Australia (RBA) has announced a cut in interest rates this week, its second in months, to bring cash rates to an all-time low of 1%.

Meanwhile, the US Federal Reserve last month signaled openness to reduce rates, with the market anticipating a cut during its meeting this July.

“Just be patient. We’ll get there. Ano pa rin sila, monetary easing. So expect some,” said Diokno.

The BSP lowered policy rates by 25 basis points in May. It reduced the overnight borrowing rate to 4.5%, the overnight lending rate to 5.0%, and the overnight deposit rate to 4.0%.

Diokno said they will first look at the impact of the pre-announced cut in the reserve requirement ratio.

“I won’t announce, kasi hindi pa nga kami tapos sa reserve requirement … end of July. Right now, pinagaaralan pa lang namin,” he said.

In May, the Monetary Board announced a 200-basis-point reduction in the reserve requirement in three stages—with the full effect to take place on July 26. —VDS, GMA News