Bangko Sentral to continue cutting RRR in next 2 years: analyst


Posted at Sep 30 2019 11:51 AM

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MANILA – The Bangko Sentral ng Pilipinas is poised to continue cutting the reserve requirement ratio or RRR for banks in the next 2 years, an analyst said Monday. 

The BSP may cut the RRR by 200 basis points next year and by another 200 basis points by 2021 in a staggered manner, HSBC Asia economist Noelan Arbis told ANC.

A 100-bps RRR cut was announced Friday, a day after the BSP slashed interest rates by another 25-basis points, which brought the benchmark rate to 4 percent from 4.75 percent in 2018. 

“I think it’s best for the BSP to cut the RRR in a more staggered manner from here on now. Expect more 50-basis point for each quarter per se rather than a hundred each time. While we don’t really see any near term risks with RRR cuts, I think a slower phase of RRR cuts is also more prudent,” he added.

Money supply and bank lending growth are expected to pick-up further following the recent monetary policy loosening, Arbis said.