{"id":173557,"date":"2018-07-27T03:26:44","date_gmt":"2018-07-27T07:26:44","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=173557"},"modified":"2018-07-27T03:26:44","modified_gmt":"2018-07-27T07:26:44","slug":"enough-rrr-cuts-year-espenilla","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2018\/07\/27\/enough-rrr-cuts-year-espenilla\/","title":{"rendered":"Enough RRR cuts this year: Espenilla"},"content":{"rendered":"
\"\"<\/a>
FILE: BSP Gov. Nestor A. Espenilla, Jr. keynotes 2018 RBAP Annual National Convention in SMX Center, Davao on May 21 (Photo<\/a>: Bangko Sentral ng Pilipinas\/Facebook<\/a>)<\/figcaption><\/figure>\n

MANILA<\/strong>\u00a0— Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. says the 200 basis point cut in banks’ reserve requirement ratio (RRR) is enough for the year.<\/p>\n

Espenilla made the pronouncement despite the forecasts of some analysts that said otherwise.<\/p>\n

The BSP\u2019s policy-making Monetary Board (MB) reduced commercial and universal banks\u2019 reserve requirement by 100 basis points each in February and May as part of the central bank\u2019s bid towards a more market-based implementation of monetary policy and continued financial market reforms.<\/p>\n

Espenilla is committed to bring big banks\u2019 reserve requirements to single digit levels before his six-year term ends in 2023.<\/p>\n

In a message to journalists Thursday, the central bank chief said the liquidity impact of their recent RRR cuts \u201chas been fully neutralized through OMO (open market operations), which includes the overnight reverse repurchase (RRR) facility.<\/p>\n

He said reduction in RRR \u201ccan resume next year just as inflation returns to target based on our forecast.\u201d<\/p>\n

\u201cThe goal of achieving single digit RRR by the end of my term is therefore quite attainable without sacrificing effective monetary control. Cutting RRR by 200 bps this year already sends a credible and concrete signal to the financial system of BSP(\u2018s) commitment to structural reforms so the industry can be guided accordingly in developing their long term strategic plans,\u201d he added.<\/p>\n

Inflation continues to rise and averaged at 4.3 percent in the first half of 2018, higher than the government\u2019s 2 to 4 percent target for this and next year.<\/p>\n

It registered a multiyear high of 5.2 percent last June from the previous month\u2019s 4.6 percent after the jump of the heavily-weighted food and non-alcoholic beverages index and strong rise of the alcoholic beverages and tobacco index partly due to the tax reform law.<\/p>\n

On Wednesday, Luis E. Breuer, Mission head of the IMF team that visited the country from July 11-25, 2018 for the Article IV Consultation, said the Philippines continues to have high RRR level and noted that \u201creducing them is a good thing.\u201d<\/p>\n

He explained that maintaining high RRR levels in the past years is necessary when the country registered balance of payment (BOP) surpluses \u201cthat had monetary effect and given that the BSP\u2019s legal framework limits how it can control inflation.\u201d<\/p>\n

\u201cThere is no question to us that reducing RR is a good thing. The question is when to do it and by how much,\u201d he said, but stressed that this decision lies on the hands of monetary authorities.<\/p>\n

The IMF official said the RRR cuts so far this year have not resulted in any significant monetary impact \u201cbecause the BSP offset these actions with other measures including increasing sterilization and absorption of liquidity using other tools. But we also noted that this has led to some communication challenges on the stance of monetary policy,\u201d he said.<\/p>\n

Breuer said the IMF supports the \u201cBSP\u2019s intention to take stock of what has been done already and pause perhaps on further reductions on the reserve requirement until inflation is clearly on a downward path and inflationary expectations are better anchored.\u201d<\/p>\n

\u201cCommunications as they relate to inflation expectations are very important because perceptions have an economic impact,\u201d he added.<\/p>\n","protected":false},"excerpt":{"rendered":"

MANILA\u00a0— Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. says the 200 basis point cut in banks’ reserve …<\/p>\n","protected":false},"author":33,"featured_media":172481,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-173557","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","mauthors-ramon-monsalve","mauthors-jr","mauthors-philippine-news-agency"],"_links":{"self":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/173557","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/comments?post=173557"}],"version-history":[{"count":0,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/173557\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media\/172481"}],"wp:attachment":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media?parent=173557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/categories?post=173557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/tags?post=173557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}