RTTNews - Thursday, the Bangko Sentral ng Pilipinas cut its key policy interest rate by 25 basis points to a record low of 4%, in line with economists' expectations.
The central bank also lowered its overnight lending rate to 6% from 6.25%. This is the sixth time since December 2008 that the central bank has cut its policy interest rates.
Given prevailing downside pressures on prices and output due to the impact of weaker global economic activity on domestic demand, the reduction in policy rates will support economic activity as banks are expected to pass on the lower borrowing costs to clients, the central bank said in a statement.
Moreover, the central bank noted that significant monetary easing has already taken place since December 2008, with key policy rates being reduced by a total of 200 basis points and liquidity provision being undertaken through lower reserve requirements, a larger re-discounting budget, and easier access to the re-discounting facility.
With considerable monetary stimulus already in place, and the impact of fiscal action already in the pipeline, the Monetary Board believes that prevailing monetary settings are appropriately calibrated to the outlook for inflation and domestic demand, the central bank said.
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