BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno acknowledged market expectations of further policy easing as "good," because it means heading out of bank's policy action Thursday.
Mr. Diokno said on the sidelines of the Euromoney Philippine Investment Forum in Makati in response to a question about market expectations: “Good. Good good. You don't have to keep guessing. There will be an announcement on Thursday after the Monetary Board policy meeting. ”
Asked whether the monetary board would also move to bank reserve requirement ratio (RRR), he said, “Hindi provide (Maybe not)… pero yung RRR naman is always on the agenda (but he RRR is always on the agenda). Pwede naming i-announce 'Yun (We can announce it) anytime. Yung RRR walang definite schedule or. (The RRR has no definite schedule), ”he told reporters Tuesday.
An analyst said the central bank has adopted a new approach to signaling the rate of action in response to flagging growth.
In a note, ING Bank NV Manila economist Nicholas Antonio T. Mapa said the BSP's new communication policy "puts primacy on transparency as Diokno looks to restore credibility and establish trust with the market through forward guidance."
“Even as the BSP embarks on a heroic gambit to promote flagging growth via easing, the market reaction has been positive and the peso has been stable. Thursday will see another 25 bps cut to the RRP (reverse repurchasing rate) to bolster growth and the BSP will announce the fourth quarter RRR reduction schedule, with a pair of 50 bps reductions at the end of October and November, ”he said.
According to a BusinessWorld poll, seven out of eight analysts are calling for another 25-basis point cut by the Monetary Board, similar to its actions on May 9 and Aug. 8. Those moves reduced RRP, overnight deposit and overnight lending rates to 4.25%, 3.75% and 4.75%, respectively. – Luz Wendy T. Noble