The Philippines’ central bank governor said he hoped benchmark interest rates could be cut in 2024, once inflation was under control, and flagged the prospect of lowering reserve requirements for banks in the first half of this year. | Reuters
Another easing measure could involve banks’ reserve requirement ratio, with a high probability of it being cut in the first half, Medalla told reporters.Monetary authorities last cut the RRR, or the percentage of deposits and deposit substitutes banks must keep with the BSP, by 200 basis points to 12 percent in March 2020.
The BSP stands ready to take further monetary policy actions to bring inflation back to within a target-consistent path, Medalla said. The consumer price index [PHCPI=ECI] rose 8.1 percent to a 14-year high in December from a year earlier, mainly driven by food and energy costs. The figure brought the average full-year inflation rate to 5.8 percent, also a 14-year high and above the official 2 percent-4 percent target band.
“If the U.S. is increasing policy rates, we need not match it but if it’s 50 , it’s hard not to respond, at least partially,” Medalla said.
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