Bangko Sentral seen to pause rate cuts for 'extended period'

ABS-CBN News

Posted at Oct 25 2019 03:23 PM | Updated as of Oct 25 2019 03:32 PM

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MANILA — The Bangko Sentral ng Pilipinas will likely pause from reducing interest rates for an "extended period," after cutting the benchmark thrice this year and with economic growth expected to rebound, an analyst said Friday. 

The BSP slashed the overnight borrowing rate by a total 75 basis points in 2019, bringing it to 4 percent. The last of 3 25-point cuts was announced last Sept. 26.

The monetary authority also reduced the reserve requirement ratio or RRR for commercial banks to 14 percent. While "a little bit ahead," it was within BSP Governor Benjamin Diokno's guidance to bring it to "single digit" before 2023, said Nomura senior economist Euben Paracuelles.

"The governor has indicated he's done for the year," Paracuelles told ANC's Market Edge.

Growth is expected to pick up "significantly" following the BSP's policy actions, said Paracuelles, who gave gross domestic product growth forecasts of 5.9 percent in the third quarter and 6.9 percent in the fourth quarter.

Paracuelles said he was keeping his 6-percent GDP growth forecast for the full year.