MANILA -- A respected economist forecasts 100 basis points reduction in Philippine banks’ reserve requirement ratio (RRR) Thursday due to the weaker-than-expected growth in the first quarter this year.
Regina Capital Managing Director Luis Limlingan, however, discounts any adjustment in the Bangko Sentral ng Pilipinas’ (BSP) key rates, at least for now.
“Probably hold on rates but reduce RRR,” he told the Philippine News Agency (PNA) Thursday.
The Philippine Statistics Authority (PSA) said domestic output, as measured by gross domestic product (GDP), in the first three months this year slowed to 5.6 percent, the slowest since the first quarter of 2015’s 5.1 percent. GDP growth in the last quarter of 2018 is 6.3 percent.
Limlingan projected first quarter output to be at 5.9 percent.
BSP’s policy-making Monetary Board (MB) is scheduled to announce its policy decision late Thursday afternoon and it is widely expected to cut rates since inflation continues to decelerate.
Rate of price increases peaked at 6.7 percent in September to October last year due to supply-side factors like lack of supply of rice and several other agricultural products.
However, inflation has slowed and returned to within-target levels last February to 3.8 percent. BSP has set the 2018 to 2022 target between 2 to 4 percent.
Last April, inflation further slowed to 3 percent while average in the first four months stood at 3.6 percent.
Economists have projected the BSP to start cutting rates after the total of 175 basis points increase in 2018 due to elevated inflation rate. (PNA)
