Bangko Sentral mulls 'cap' on credit card interest rates

ABS-CBN News

Posted at Aug 24 2020 10:53 AM | Updated as of Aug 24 2020 11:10 AM

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MANILA - Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said Monday they are eyeing to put a cap on credit card interest rates to be at par with its Asian neighbors.

In the Philippines, credit card interest rates "goes up to 40 percent, which to me is unacceptable," Governor Diokno told ANC. 

As a result, Filipinos could use more of the facility if there is a cap on interest rates, he said.

Diokno added, it was "time for us to make a pause" in cutting policy rates as the economy reopens under less stricter coronavirus restrictions. 

The Monetary Board kept key interest rates steady at its "lowest level" of 2.25 percent during its last meeting. 

The Bangko Sentral ng Pilipinas, which has been one of the most aggressive in the region in terms of cutting rates, has reduced the overnight borrowing rates by a cumulative 175-basis points this year.

"I think we have to appreciate that monetary policy works with a lag now that the economy has started to open, I think it’s time for us to pause and see how the economy is absorbing our monetary policy," Diokno said. 

When asked if the pause would be effective for the rest of the year, Diokno said: "we are always data-dependent so we continue to evaluate the situation."

Metro Manila and its neighboring provinces are placed under general community quarantine until Aug. 31. Business and public transportation are allowed to operate under reduced capacity.