Rate cuts to drive credit demand in Philippines: Moody's


Posted at Sep 04 2019 09:55 AM | Updated as of Sep 04 2019 10:24 AM

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MANILA - Monetary policy easing and catch-up spending in the second half can help drive growth in bank lending for the rest of the year, an analyst said Wednesday.

The Monetary Board cut interest rates by a total of 50 basis points to 4.25 this year, from 4.75 percent in 2018. It also cut the reserve ratio requirement or RRR for banks by a total of 200-basis points.

“Lower rates from dovish BSP will definitely lower the lending rates. Loan demand, along side a pickup in economic activities with the passage of the budget in April, these 2 sectors will drive the loan recovery,” Moody’s Investor Service analyst Tengfu Li told ANC.

Cooling inflation due to lower prices of rice and oil gives the BSP room for more interest rate and RRR cuts this year, Li said.