The Philippine central bank is not inclined to adopt a zero interest rate policy as the government eases lockdown restrictions during the pandemic, Governor Benjamin E. Diokno said on Thursday.
“In my view, not at the moment because as I’ve said before, we have paused,” he told congressmen during a hearing in mixed English and Filipino when asked if the Bangko Sentral ng Pilipinas (BSP) would follow the trend of other central bank with near-zero interest rates.
He noted that the central bank had slashed key rates by 175 basis points this year to 2.25% to stimulate growth the shield the economy from the effects of the pandemic. He added that BSP is assessing whether another rate cut is needed.
“We’re in a waiting position,” Mr. Diokno said, adding that he does not see local interest rates at zero.
He advised lawmakers to be cautious in drafting a stimulus package because not all industries can recover.
“We cannot save all,” the governor said. “The resources of the government are finite.”
The House of Representatives is pushing for a P1.3-trillion stimulus package for sectors hit hard by the lockdown including tourism, transportation, agri-fisheries, and micro, small and medium enterprises.
“You can convert that into a multi-year fiscal plan for the pandemic,” Mr. Diokno told the virtual hearing.
He said the central bank is seeking the passage of a measure that will allow the transfer of bad loans to asset management companies and increase the maximum loan guarantee coverage for small businesses.
Also among its priorities are bills providing protection to financial consumers and proposed changes to the law on deposit secrecy, he said. — Charmaine A. Tadalan