Rebound 'limited' so far, Diokno says as BSP ponders on next rate cut

ABS-CBN News

Posted at Jun 22 2020 09:58 AM | Updated as of Jun 22 2020 10:07 AM

Rebound 'limited' so far, Diokno says as BSP ponders on next rate cut 1
Bangko Sentral ng Pilipinas Governor Benjamin Diokno answers questions during a briefing Dec. 17, 2019. Jonathan Cellona, ABS-CBN News/file

MANILA -- Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday the economic recovery had been "limited" so far based on data from big tech, ahead of an interest rate-setting meeting this week.

The scale of the economic contraction in the second quarter and inflation data will determine whether or not the benchmark interest rate will be cut further on Thursday, he said.

Inflation of 2 percent will give the BSP "leeway" to cut borrowing rates further, he said. Inflation was at 2.2 percent in May and 2.1 percent in April.

"Will there be a cut in the June to August meeting? We're looking at it and we're looking at information," Diokno told ANC's Market Edge.

"Non-traditional" information from Apple and Google indicate "limited economy thus far," he said.

Diokno has cut the overnight borrowing rate by 125 basis points so far this year, 100 of which were delivered during the 11-week lockdown of Metro Manila and other urban areas.

He also has authority from the Monetary Board to match the 200 basis point reduction in the reserve requirement ratio or RRR for banks this year to free up more cash in the system.

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There could be "too much" liquidity in the financial system at the moment, he said.

Second quarter gross domestic product data will be the worst this year, Diokno said. The third quarter will be better, preceding a rebound in the last 3 months of the year, he said.