MANILA, Philippines - British banking giant HSBC says the record low interest rate on Treasury bills would discourage banks from lending, and consequently, hurt the economy.
HSBC Philippines CEO Wick Veloso said banks may opt for a benchmark other than the 91-day T-bill rate which fell to an all-time low of 0.15% at Monday's auction.
"Everything on the extreme is not going to be healthy to manage the economy. I doubt that people are going to want to lend at this level, they will use a different basis to lend," he said.
Banks commonly use the 91-day T-bill rate as basis for pricing short-term loans, and a less than 1% interest would mean you'll be paying less for your mortgages and reduce your lender's profit. - ANC