MANILA - (UPDATE) The Bangko Sentral ng Pilipinas on Thursday cut interest rates for the third time this year, as the government moved to revive economic growth momentum and as inflation continued to slow.
The 25 basis point cut in the overnight borrowing rate brought the benchmark to 4 percent, from 4.75 percent in 2018, when monetary authorities sought to cool inflation that was at near 10-year highs at that time.
BSP Governor Benjamin Diokno said they cut rates amid signs of slowing inflation.
"The Monetary Board's decision is based on its assessment that price pressures have eased further since the previous meeting," Diokno said.
While tensions in the Middle East may cause oil prices to rise, and the fallout from the African swine fever may push food prices up, Diokno said the BSP sees inflation settling at the lower end of the government's target range of 2 to 4 percent.
Inflation cooled further to a 3-year low last August, giving the central bank scope to further loosen policy, analysts said.
The BSP last cut the overnight rate by 25 basis points in August, after the government announced that gross domestic product in the April to June quarter slowed to a 4-year low, dragged by the failure of lawmakers to pass the 2019 national budget on time.
Diokno said the Monetary Board also sees prospects for global economic growth likely to remain weak "owing mainly to the uncertainty over trade policies."
After Thursday, the Monetary Board has 2 more meetings left this year, on Nov. 14 and Dec. 12.
Diokno earlier signaled that a cut in the benchmark rate and the reserve ratio requirement or RRR for banks would come "sooner than later."
Diokno also earlier said he wanted the RRR brought down to "single digit" by 2023.