No rush to further cut rates — Diokno

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is not keen on further slashing interest rates other than the 50 basis points signaled late last year despite the impact of the global outbreak of the 2019 coronavirus disease (COVID-19).

BSP Governor Benjamin Diokno said monetary authorities are not in a hurry to cut interest rates anew after resuming its easing cycle with a 25 bps rate cut last Feb. 6.

“We have already indicated that we are going to reduce the interest rate by 50 basis points. So we have done the 25 bps, so we may accelerate. We are planning to do that within the second quarter or second half of the year,” he added.

The BSP’s Monetary Board returned to the easing path, slashing interest rates by 25 basis points last Feb. 6, as a preemptive move to support market confidence amid higher prices and uncertainties brought about by the COVID-19 outbreak.

Lowering interest rates would translate to lower borrowing costs for companies and individuals, helping boost lending as well as economic activity.

This brought the cumulative rate cuts to 100 bps since May last year, partially unwinding the tightening cycle that saw rates jump by 175 bps in 2018.

“At the moment, I don’t see a need for monetary easing other than what we have done. At the moment I don’t see a need for another rate cut. We are happy where we are right now,” the BSP chief said.

The next rate-setting mee-ting of the Monetary Board in the first quarter is scheduled on March 19, while the meetings in the second quarter is scheduled on May 21 and June 21.

Likewise, the BSP chief said there is no need to deploy additional tools other than the traditional interest rate cuts and lowering of the reserve requirement ratio (RRR) to help combat the projected slowdown due to the COVID-19 outbreak.

“Other monetary authorities in other countries are tapping all sorts of measures because they are running out of bullets. We are still happy where we are. We have the traditional interest rate cut and reserve requirement, we don’t have to resort to other measures,” Diokno said.

Based on estimates, he said the virus outbreak could slash the gross domestic product (GDP) growth by 0.3 percentage point this year. Economic managers penned a GDP growth of between 6.5 and 7.5 percent for this year.