NADI, Fiji -- (UPDATE) Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday cutting interest rates and the reserve ratio requirement for banks was "inevitable" with banks "complaining of tightness" in liquidity conditions.

A 1-point reduction in the reserve requirement every quarter for 4 quarters remains "on the table" and will be discussed with the Monetary Board, Diokno said in an exclusive interview with ANC on the sidelines of an Asian Development Bank annual meeting here.

Coming from a 175-basis point increase in the benchmark rate last year and with the reserve ratio at one of the highest levels in Asia, Diokno said, "It is inevitable that we will have to cut both the reserve requirement ratio and the interest rate."

"We're starting from the previous year's 175-point increase. That's not normal," he said.

Asked about the Federal Reserve's statement that it would neither cut not raise rates soon, Diokno said: "That gives us some opportunity for easing."

Asked if the S&P Global upgrade, which is seen as a vote of confidence on the economy, would make easing faster, Diokno said: "Yes, that is another factor, that we can now move faster this time."

Banks have been "complaining of tightness" in liquidity, said Diokno, who will preside over his second Monetary Board meeting on May 9. The benchmark rate was kept steady during his first policy meeting as BSP governor.

A 1-percentage point cut in the reserve requirement would release P90 billion into the banking system, he said.

"As I said, this is a decision to be made by the Monetary Board. That's not my decision alone," he said.

• Reserve ratio should be single digit before 2023: Diokno
• Diokno: BSP must ensure 'steady, strong' growth as inflation returns to target

The BSP raised the benchmark borrowing rate by 175 basis points in 5 successive meetings in 2018 to contain inflation that peaked near 10-year highs.

Diokno assumed office in March, saying part of the BSP's mandate was to ensure "steady, strong" economic expansion, which was seen as a signal of a pro-growth bias.

Earlier this week, Diokno said the reserve requirement ratio for banks, currently at 18 percent, should be reduced to single-digit by the end of his term in 2023.