BSP cuts key interest rates to record low of 2 percent

The Bangko Sentral ng Pilipinas (BSP) Monetary Board has cut its key interest rates by 25 basis points, bringing the overnight reverse repurchase (RRP) rate to a record low of 2 percent.

This marks the fifth reduction this year, and economists anticipate further rate cuts in the coming year due to the need to boost economic activity.

The BSP cited benign inflation, within-target inflation projections, global economic uncertainties, a surge in COVID-19 cases, and the impact of recent typhoons as reasons for the rate cut.

The central bank expects continued policy support to bolster economic activity and boost market confidence, despite concerns about the efficacy of further cuts due to weak transmission.

Inflation forecasts for 2020 were revised slightly upwards to 2.4 percent, while projections for 2021 and 2022 were lowered to 2.7 percent and 2.9 percent, respectively.

Economic managers forecast this year's GDP to be around -5.5 percent, with a projected recovery of 6.5-7.5 percent for 2021.