MONETARY AUTHORITIES could still slash benchmark interest rates anew in their eighth and last policy review for the year on Dec. 12, provided conditions warrant further easing this soon beyond the 75-basis-point total cut so far, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Monday.

“The BSP will always be data-dependent so we will evaluate… every time we have a policy meeting,” he told reporters on the sidelines of the Financial Education Stakeholders Expo at SMX Convention Center in Pasay City.

A Nov. 18 S&P Global Ratings’ report said it expected a 25-bp cut towards yearend, but the Philippine section of the report may have been written before the BSP reduced banks’ reserve requirement ratio (RRR) a fourth time, totaling 400 bps for the year, on Oct. 24 since it referred to a 300- bp cumulative RRR cut.

Monetary authorities stayed monetary policy settings during their Nov. 14 review.

Asked on S&P’s rate cut expectation, Mr. Diokno said. “Pwede ‘yun, pwede ‘yun (It is possible).

Benchmark policy rates now stand at 3.5% for overnight deposit, four percent for overnight reverse repurchase and 4.5% for overnight lending.

After this year’s 400 bp reduction, the RRR starting next month will be 14% for universal and commercial lenders as well as non-bank financial institutions with quasi-banking functions, and four percent for thrift banks, while the requirement for rural banks will remain at three percent.

At the same time, Mr. Diokno said monetary authorities will avoid “drastic” policy adjustments since they do not want to be misinterpreted by the market as being “desperate”.

“Usually if you’re doing some reform, dapat siguro (maybe it should be) gradual so you can monitor ‘yung development… Kasi minsan, ‘pag drastic baka disruptive (Because sometimes, if it’s drastic, it could be disruptive),” he said.

“It [could also be] misinterpreted na desperado ka (that you are desperate). We’re not desperate. In fact ‘yung policy natin ngayon (our policy right now) is appropriate for where we want to be.”

He had also said late last week that monetary authorities would want to watch previous policy moves take root in the market, since it takes up to nine months for the impact to be evident.

The central bank is set to release domestic liquidity data as of October as well as outstanding loans disbursed by big banks on Friday.

Latest data from the BSP showed that domestic liquidity expanded by 7.7% year on year in September to P12 trillion from a 6.3% growth in August. Meanwhile, loans disbursed by universal and commercial banks kept a 10.5% expansion pace in September from August. — Luz Wendy T. Noble

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