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Nomura sees BSP cutting RRR in April
The Bangko Sentral ng Pilipinas (BSP) is anticipated to implement a 200-basis-point reduction in banks' reserve requirement ratio (RRR) as early as April.
This move is seen as a way to stimulate economic activity without significantly impacting the exchange rate, unlike policy rate cuts.
Economists from Citi noted that a previous RRR cut in October 2024 has already contributed to easing financial conditions and boosting domestic demand.
Nomura economists have revised their forecast, now expecting the RRR cut in April, potentially to meet increased liquidity demands before the midterm elections in May.
The BSP's strategy of reducing the RRR before further policy rate cuts is viewed as a means to enhance the effectiveness of its monetary policy transmission.
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