MANILA – Philippine monetary officials on Thursday reduced anew the Bangko Sentral ng Pilipinas’ (BSP) key policy rates by 50 basis points (bps) to help cushion the economic impact of the coronavirus disease 2019 (Covid-19) pandemic.
“BSP cut key policy rates by 50 bps,” BSP Governor Benjamin Diokno told journalists in a Viber message.
The cut, which will take effect on Friday, brought the BSP’s overnight reverse repurchase (RRP) rate to 2.75 percent, the overnight deposit facility rate to 2.25 percent, and the overnight lending facility rate to 3.25 percent.
In a Tweet, Diokno said the policy-making Monetary Board’s (MB) decision was made “to further support the economy during this extraordinary time.”
“This is to strongly encourage lending to various sectors, especially to the most vulnerable, amid the Covid-19 pandemic,” he said.
Since the start of the year, the BSP’s key rates have been slashed off a total of 125 basis points, at 25 bps last February and 50 basis points last March.
Aside from the rate cuts, the central bank has also cut universal and commercial banks (U/KBs’) reserve requirement ratio (RRR) by 200 basis points to 12 percent to date.
This is on top of the PHP300 billion that the BSP extended to the national government through a repurchase agreement for government securities that are redeemable within a six-month period.
The BSP has also announced operational relief measures for foreign exchange transactions, as well as regulatory relief for banks.
Such measures are targeted to ensure economic activities despite the quarantine, initially in Metro Manila, from March 15 to April 12, and the whole of mainland Luzon starting March 16.
The enhanced community quarantine has been extended until April 30 to ensure that gains in the fight against Covid-19 will have more leeway.
Local and provincial governments in the Visayas and Mindanao are also implementing various levels of quarantine.
Economic managers forecast that the movement restrictions, aimed at addressing the spread of the virus, will result in a zero or -1 percent output, as measured by the gross domestic product, for the Philippine economy this year.
As of April 16, total Covid-19 cases in the country reached 5,660, some 435 of whom have recovered while 362 have died.