Finance Secretary Ralph Recto expects the Bangko Sentral ng Pilipinas to further reduce key interest rates this year, possibly matching the latest reduction delivered by the U.S. Federal Reserve.
Last week, the US Fed lowered the target for federal funds rate by half-a-percentage point to a range of 4.75 percent and 5.00 percent.
“I think we can cut rates by half a percent as well,” Sec. Recto told reporters at a briefing in Malacanang.
Recto also sits as a member of the Bangko Sentral ng Pilipinas’ policy making monetary board as representative of the government sector.
During the August policy meeting, the central bank cut overnight rates by 25 basis points for the first time in four years. The last two policy meetings this year are scheduled on 17 October and 19 December.
He said easing food prices, particularly rice given the tariff reduction, should sustain the slowdown in inflation that in August eased to an 8-month low 3.3 percent, giving the central bank a wider berth to ease interest rates.
Last week, the BSP lowered the banks’ reserve requirement ratio by 250 basis points for universal and commercial banks while those for digital banks and thrift institutions received reductions of 200 and 100 basis points, respectively.
