The Philippine central bank is reducing lenders’ reserve requirement ratio at the end of the month, Governor Felipe Medalla said, as he signalled the policy rate will remain unchanged.
Bangko Sentral ng Pilipinas will trim reserve requirement of big banks by 250 basis points to 9.5%, effective June 30, it said in a statement Thursday. The ratio for digital banks will be reduced by 200 basis points to 6% while that for thrift banks will be cut by 100 basis points to 2%, it said.
The central bank said the lower reserve requirements “do not constitute any shift in the BSP’s monetary policy settings.” The reduction will coincide with end of alternative modes of compliance with reserve requirement, it said.
Medalla said monetary authorities may keep the benchmark rate at the current level after halting its fastest monetary tightening in two decades last month. “My own view is that the pause is very likely to continue because the recent data is consistent with it,” he told reporters. The central bank’s Monetary Board will hold its next policy meeting on June 22.
BSP said it “continues to prioritize bringing inflation back towards a target-consistent path over the medium term and will continue to signal its monetary policy stance through the key policy interest rate.”
The central bank had earlier flagged its plan to trim banks’ reserve ratio in June amid cooling inflation. The ratio currently stands at 12% for large lenders.
Medalla last month signaled an extended pause on interest rates amid easing inflation and a slowing economy.
--With assistance from Cecilia Yap.
