MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno on Monday urged consumers to spend and take advantage of record low interest rates to help revive the pandemic-hit local economy.
Diokno said inflation is the “least of their worries” now, as it stands ready to use a “full range” of monetary tools as needed to support the economy.
“Inflation is the least of our worry at this time. We want people to spend money, in worthwhile projects. If you want to invest in a new house do it now, because conditions really are to your favor. Interest rates are so low and it will remain low for quite some time,” Diokno said on ANC’s Market Edge.
BSP pulled a surprise rate cut of 50 bps last week, bringing key benchmark rates to a record low. The move was its fourth this year.
Diokno has cut the overnight borrowing rate by 175 basis points so far this year, 100 of which were delivered during the 11-week lockdown of Metro Manila and other urban areas.
The BSP forecast inflation to average 2.3 percent this year and 2.6 percent in 2021, higher than the April estimates but well within the official target of 2 to 4 percent for both years.
Second quarter gross domestic product is likely to be worst, seen shrinking by 5.7 to 6.7 percent.
The third quarter will be better, preceding a rebound in the last 3 months of the year, Diokno said.
The Philippine economy shrank in the January-to-March period, a first since 1998 ending over two decades of growth.