BSP under Diokno likely to 'accelerate' policy easing: HSBC


Posted at Mar 13 2019 10:19 AM | Updated as of Mar 13 2019 10:35 AM

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MANILA – Bangko Sentral ng Pilipinas Governor Benjamin Diokno could "accelerate" the pace of policy easing to support growth as inflation cools, an analyst said Wednesday.

While Diokno will likely keep policy rates unchanged during his first Monetary Board meeting on March 21, he could reduce the benchmark borrowing rate by 50 basis points and bring down the reserve ratio requirement to 15 percent by the end of the year, said HSBC economist Noelan Arbis.

"As long as inflation continuous to creep down, which is what we expect, then that should warrant an RRR cut first in the beginning of Q2 followed by a policy rate cut perhaps towards the end of Q2," Arbis told ANC's Market Edge.

Diokno told ANC on Tuesday that he was "convinced" of the need to ease policy with inflation slowing. He also signaled a pro-growth stance, saying: ""Everybody should be pro-growth, we need growth in this economy."

Diokno also said the peso at the P52 level against the dollar was not "too strong" and within the BSP's P52 to P55 band. The peso weakened by 0.7 percent after the governor's comments.

Arbis said the peso could weaken further to P54 by the end of the year reacting to monetary policy adjustments and a strong dollar