THE central bank will consider another rate cut in the first quarter of 2020 in order to discourage hot money, according to Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno.

“I promised first quarter of this year maybe 25 basis points (bps) and we’ll continue to look at other numbers,” he told reporters at the first meeting of the Tuesday Club held in Pasig City.

“Kasi ayaw naman natin na ang real interest rates ay higher compared to the rest of the world. Papasok diyan ’yung tinatawag nating hot money (Because we would not want our real interest rates to be higher compared to the rest of the world. Hot money will enter in that case). We don’t like hot money,” he said.

In the first quarter, the Monetary Board is due to meet on Feb. 6 and March 19.

In 2018, the central bank reduced key policy rates by a total of 75 bps, partially dialling back the 175 bps worth of rate hikes in 2018 amid a multi-year highs in inflation. He declared his intention to work on reducing the remaining 100 bps.

The overnight reverse repurchase rate is at 4% while overnight lending deposits and lending are at 3.5% and 4.5%, respectively.

Inflation in December rose to 2.5% on seasonal demand from holiday goods and adverse weather, according to the Philippine Statistics Authority. Average inflation for the year was at 2.5%. — Luz Wendy T. Noble

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