BSP plans 200-basis-point RRR cut in April

The Bangko Sentral ng Pilipinas (BSP) is expected to proceed with a planned 200-basis-point cut in banks' reserve requirement ratio (RRR) as early as April.

Nomura chief economist for ASEAN Euben Paracuelles noted that reducing the RRR before easing policy rates enhances policy transmission and provides greater support to the economy, which still requires accommodative measures.

Paracuelles sees April as a potential window for the next round of cuts, citing the need to counter possible liquidity tightening ahead of the country's elections in early May.

BSP Governor Eli Remolona Jr. confirmed plans to reduce lenders' RRR to five percent from seven percent by the first half of this year, though the exact timing is still under discussion.

Analysts noted that the rate pause last week reflects the central bank's cautious approach amid global uncertainties and inflationary risks, while also highlighting concerns about peso depreciation and its impact on domestic prices.