BSP has 'live' discussion on reserve requirement cut: deputy gov


Posted at Aug 13 2019 10:08 AM | Updated as of Aug 13 2019 10:46 AM

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MANILA -- Further cuts in the reserve ratio requirement for banks is the subject of "live" discussions in the Bangko Sentral ng Pilipinas' policy-making board, one of its members said Tuesday, adding recent actions were "well received."

Governor Benjamin Diokno signaled bringing the RRR to single-digit level after the Monetary Board cut the overnight borrowing rate used by banks to price loans by 25 basis points last Thursday, said BSP Deputy Governor Francisco Dakila.

Inflation will be the "key number' in deciding further adjustments to monetary policy, Dakila told ANC's Market Edge.

"The latest round of adjustments was quite well received …It was done at a very good time when inflation was low and that benign inflation environment has allowed the BSP to reduce the policy rate by 25 basis points," Dakila said. 

"The governor has given the guidance that there should a program of reduction of reserve requirements and we are aiming for a single digit…We continue to be data driven so that is a live discussion on the monetary board," he said.

Loan demand will likely increase in the second half since it would take some time before real economy absorbs recent policy adjustments, Dakila said.

"In the second half of this year, we expect a recovery in economic activity and with that an increase in the demand for loans so there should be a recovery in lending in the second half," he said.