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Another rate cut still possible – Diokno

The central bank is open for further policy easing at the last rate-setting meeting of the monetary authorities this year if developments permit.

Governor Benjamin Diokno. Photo by Bangko Sentral ng Pilipinas

In an interview on Monday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno
said it is “possible” that the central bank‘s policy-making body, the Monetary Board, will implement another interest rate cut at its last meeting on December 12.

The Monetary Board has so far implemented a combined 75-basis-point (bps) BSP interest rate cut in May, August and September. This brought overnight borrowing, lending and deposit rates to 4 percent, 4.50 percent and 3.50 percent, respectively.

However, Diokno stressed that any monetary policy decision of the Bangko Sentral “will always be data dependent” and will be evaluated thoroughly.


His comment is a response to S&P Global Ratings’ expectation that the central bank will implement another 25-basis point rate cut later this year to bring the overnight reverse repurchase rate to 3.75 percent.

In its November 14 meeting, the BSP said the Monetary Board believes that prevailing monetary policy settings remain appropriate.

“This is supported by the benign inflation outlook and a firm outlook for domestic economic growth,” the central bank noted.

The BSP added that its latest baseline forecasts continue to indicate that inflation is likely to settle within the lower half of the target band of 2 to 4 percent this year.

“Upside risks to inflation over the near term emanate mainly from the potential impact of the African swine fever outbreak on food prices and from potential volatility in oil prices amid geopolitical tensions in the Middle East,” it said.

“At the same time, weak global economic prospects continue to temper the inflation outlook, as uncertainty over trade policies weigh down on global economic activity and demand,” the Bangko Sentral added.

It also said a prudent pause in monetary adjustments will enable the cumulative 75-basis-point reduction in policy rates as well as the cut in reserve requirement ratios to continue working their way through the economy.

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Today’s Front Page December 09, 2019

Today’s Front Page December 09, 2019