RTTNews - The Philippine central bank will favor to reduce its key interest rate further until it sees signs that the economy is improving, governor Amando Tetangco said Tuesday.

In April, the Bangko Sentral ng Pilipinas has reduced its key interest rate to a 17-year low of 4.5% as the worst global recession since the Second World War reduced demand for the country's exports. Since December 2008, the central bank has made a cumulative reduction of 150 basis points in the key policy rate. The next Monetary Board meeting is on May 28.

Presently, there is adequate liquidity and credit availability in the country. Remittance growth is also supporting the economy. According to latest data, remittances from overseas Filipinos reached a record high of US$1.5 billion in March 2009, representing a 3.1% year-on-year growth.

We've seen that there's sufficient liquidity in the system, Tetangco told reporters. Credit is still growing.

The central bank governor noted that the bank could take steps like cutting the reserve requirement. Even then, policy makers should monitor the pace of liquidity growth, he added.

In March, money supply grew 15.6% year-on-year, while bank lending rose 18.9%.

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