BSP eyes deeper rate cuts, further RRR reduction

The Bangko Sentral ng Pilipinas (BSP) is considering deeper interest rate cuts and further reductions in the reserve requirement ratio (RRR) to mitigate the economic impact of the coronavirus pandemic.

Governor Benjamin Diokno stated that the central bank will remain data-driven, evaluating assessments from multilateral lenders like the IMF, World Bank, and ADB before making decisions.

Nomura Global Markets Research forecasts an additional 75 basis points cut in policy rates by BSP to 2.5% in Q2, starting with a 50 bp cut possibly ahead of the next scheduled meeting on May 21.

Diokno emphasized that reverting to pre-2018 interest rate levels is no longer appropriate and that bolder moves are necessary to cushion the economic slowdown and promote rapid recovery.