MANILA - Reviving the Philippine economy will need more than interest rate cuts, an analyst said on Wednesday on the eve of the Bangko Sentral’s first monetary policy meeting this year.
BDO Capital president Ed Francisco said what the economy needs is fiscal support as well as measures that will make Filipinos confident to move around and consume again.
“I guess at a certain point though it’s really not the BSP anymore but it’s more the other incentives that have to come in,” Francisco said in an interview with ANC’s Market Edge.
The BSP slashed rates by a cumulative 200 basis points last year, as the economy suffered the worst contraction on record due to the COVID-19 pandemic.
Francisco said that even if the central bank cuts its key rate again or cuts banks' required reserves, there was little demand for more loans aside from working capital.
“If companies are not borrowing then all of these efforts to reduce the reserves won't really be beneficial,” he said.
Economists and lawmakers have been calling on the government to ramp up its fiscal stimulus, which they said lagged behind the country’s neighbors.
Economists polled by Reuters meanwhile expect the central bank to keep interest rates steady on Thursday.