MANILA -- Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Sunday the benchmark interest rate should be cut deeper as the Philippines works for a "soft landing" from the COVID-19 pandemic.
Diokno said the amount of cash that banks are required to hold as reserves would be reduced further to allow more money to circulate in the system.
Rolling back the overnight rate to 2018 levels at 3 percent "is no longer the appropriate policy goal," Diokno said. The policy rate, used by banks to price loans, is currently at 3.25 percent after a cumulative reduction of 150 basis points.
"A deeper cut is warranted in response to the expected sharp economic slowdown," Diokno said in a text message to reporters.
"While BSP has cut the policy rate by 150 bps since I assumed office last year, the Philippines is now faced a once-in-a lifetime crisis," he said.
"The monetary authorities job, in coordination with fiscal authorities, is to manage a ‘soft’ landing and ensure that economic takeoff begin quickly once the pandemic fades," he said.
Inflation is likely to settle close to the lower end of the central bank's 2 to 4 percent target range, he said. March inflation settled at 2.5 percent, with millions spending half of the month on lockdown.
Diokno said a further 200-point cut in the reserve requirement ratio or RRR was "forthcoming." He said he secured authority from the Monetary Board to slash 400 points off the RRR. The first 200-point cut was delivered last month.
Millions in Luzon are on lockdown until April 30, with most businesses shut and people on stay-at-home orders.
The Philippines as of Saturday confirmed 4,428 COVID-19 cases, including 247 deaths and 157 recoveries.
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