Diokno: Interest rate, RRR cuts may come 'sooner than later'


Posted at Sep 13 2019 12:08 PM

Bangko Sentral ng Pilipinas Governor Benjamin Diokno looks at a row of computer screens at his office in Manila on March 12, 2019. Diokno said Friday that the Philippines was building "adequate buffers" against global uncertainty. George Calvelo, ABS-CBN News/file

CAPAS, Tarlac -- Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday the Monetary Board could further ease policy "sooner than later" with inflation under control.

The MB last cut the overnight borrowing rate used by banks to price loans by 25 basis points last Aug. 8, after first half growth slowed to a 4-year low. It has 3 more policy meetings this year scheduled on Sept. 26, Nov. 14 and Dec. 12.

Diokno told reporters here that a decision on policy "won't reach November." Earlier, he said he wanted the reserve ratio requirement for banks brought down to "single digit" by 2023.

Inflation cooled further to a 3-year low last August, giving the central bank scope to further loosen policy, analysts said.

The governor's comments "all but point to a policy rate cut" on Sept. 26, said ING Bank Manila senior economist Nicholas Mapa.

"Dialing back elevated policy rates will go a long way to restoring the investment-driven growth momentum of yesteryear as capital formation proved to be the biggest drag on growth in 2Q," he said.

Confirmed cases of African swine fever in the Philippines are unlikely to stoke inflation, Diokno told reporters.

Inflation peaked in September and October last year, he said.

-- reports from Warren de Guzman in Capas and Michelle Ong in Manila