Bangko Sentral says rate cut pause to help market ‘digest’ easing actions

ABS-CBN News

Posted at Jul 13 2020 10:45 AM | Updated as of Jul 13 2020 11:30 AM

Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno at the BSP headquarters in Manila on March 12, 2019. George Calvelo, ABS-CBN News /File

MANILA - Bangko Sentral ng Pilipinas Governor Banjamin Diokno said Monday the country still has "lots of bullets" to fire if needed to support the economy in its fight against the coronavirus pandemic. 

The BSP reduced the key interest rates by a cumulative 175 basis points, bringing the benchmark to "lowest ever" at 2.25 percent, Diokno told ANC.

The BSP also cut the reserve requirement ratio for banks by 200 basis points to 12 percent. Diokno said, he was given the authority to cut RRR further to 10 percent.

"We’re just pausing to make sure that the financial sector is able to digest all these monetary easing that we’ve done so were waiting for additional information from the market to use our additional bullets but we’re ready," he added. 

"We still have a lot of bullets on our side and we can use it should the need arises," Diokno told ANC. 

Watch more in iWant or TFC.tv

Debt to GDP (gross domestic product) before COVID-19 was below 40 percent, which means the Philippines "can borrow a lot to tide us over during this pandemic," he said.

The Peso is one of the strongest in the region and the country has a "hefty" gross international reserves that is expected to reach $95 billion by the end of the year, Diokno said. 

President Rodrigo Duterte's top officials on Wednesday said the country was poised for an "economic rebound" with health measures and economic recovery protocols in place.

The economy could shrink by as much as 3.4 percent this year due to the pandemic but Diokno said it could recover to 8 to 9 percent in the coming years.