Analysts see need for cut in banks’ RRR

The Philippine central bank, widely perceived as likely to keep its key interest rates unchanged at its policy meeting this week after headline inflation hit a record low in July, now faces pressure from expectations among banks and private think tanks for a cut at least in the reserve requirement ratio (RRR) as banks take risks in supporting the economy’s growth catalysts.

Private economists warned of repercussions on growth in the local economy if bank lending slows to a less than desired pace without enough monetary support from the central bank while the commercial banks deal with fallout from an almost certain hike in the US Federal Reserve policy tightening and the slowdown in China’s economy.