BSP seen to reduce reserve requirement by another 200bps

The Bangko Sentral ng Pilipinas (BSP) is likely to reduce the reserve requirement ratio by as much as another 200 basis points before the end of the year, First Metro Investment Corp. (FMIC) said Wednesday.

According to FMIC executive vice president Daniel Camacho, the reserve requirement — the amount of cash a bank must hold in its reserves against deposits made by customers — could be slashed to 10%.

"For the rest of the year, we expect monetary policy to be front and center of the economy response to the crisis," he said in a virtual briefing.

"We are not yet ruling a possible rate cut and we believe the potential reduction of 100 to 200 basis points on the reserve requirement is forthcoming, reducing from 12% to 10% or releasing between a hundred to 200 billion pesos into the system," he added.

To recall, the BSP in March already reduced the reserve requirement by 200 basis points.

BSP Governor Benjamin Diokno last year said he wants to reduce the reserve requirement down to single-digit during his term which ends in 2023.

The BSP has so far cut key interest rates by a total of 175 basis points this year -- 25 basis points in February, and 50 basis points each in March, April, June. —KG, GMA News