'Pro-growth' Diokno will 'do the right thing' on policy, Pernia says

ABS-CBN News

Posted at Aug 08 2019 11:32 AM

'Pro-growth' Diokno will 'do the right thing' on policy, Pernia says 1

MANILA -- "Pro-growth" Bangko Sentral ng Pilipinas Governor Benjamin Diokno knows how to stimulate the economy after gross domestic product growth in the second quarter came at its slowest in 4 years, Socioeconomic Planning Secretary Ernesto Pernia said Thursday.

Economists expect the BSP to resume its rate-cutting cycle later Thursday with a 25-basis point reduction in the benchmark borrowing rate. The country's GDP grew 5.5 percent in the second quarter, falling below the 5.9-percent media forecast of economists.

"Ben is a pro-growth central bank governor and he will take the cue in terms of how to stimulate the economy with monetary policy. I'm quite optimistic that he will do the right thing," Pernia said.

Pernia was asked if a 50 basis point cut was possible instead of a 25-point reduction. He said Diokno asked him about the second quarter numbers via text message before the official announcement.

"He knows it by now," Pernia said of Diokno.

The BSP hiked interest rates by a total of 175 basis points last year to rein in inflation, which peaked at a near-decade high of 6.7 percent in September and October.

However, with inflation no longer a worry, the central bank began to unwind its tighter policy with a quarter-point rate cut in May, the first since October 2012, to shore up the economy against risks including simmering US-China trade tensions.

Some economists expect more policy rate easing before the year ends and further cuts in banks’ reserve requirement ratio (RRR) after a 200 bps phased reduction in RRR through July, to spur greater economic activity. -- with reports from Reuters