Philippine central bank cuts interest rates by 50 bps

Source: Xinhua | 2020-04-17

The Philippine central bank cut on Thursday the interest rate on the BSP's overnight reverse repurchase (RRP) facility by 50 basis points (bps) to 2.75 percent, the lowest on record, to curb the expected sharp economic slowdown due to COVID-19 pandemic.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the cut will be effective starting on Friday.

By cutting the rate, Diokno delivered on his promise to make cheaper funds available to the economy, which is expected to report zero growth this year at best, or contract by one percent at worst.

After the cut, the central bank's policy rate will now be lower than the 3-percent level at the beginning of 2018, before a series of interest rate hikes totaling 175 basis points were implemented to fight off a sharp spike in the inflation rate.

The overnight deposit and lending rates have also been slashed to 2.25 percent and 3.25 percent, respectively, effective Friday.

With the economy taking a hard hit as a result of the COVID-19 emergency, Finance Secretary Carlos Dominguez earlier said the government's economic team projects gross domestic product growth to dive to -0.8 to 0.0 percent this year.