Bangko Sentral ng Pilipinas (PNA photo by Benedicto Briones)
MANILA – A further cut in banks' reserve requirement ratio (RRR) is still possible, the Bangko Sentral ng Pilipinas (BSP) said.
"We want to eventually reduce the reserve requirement, but we're trying to figure out the right timing. We will raise it at the Monetary Board meeting at some point soon and that is another thing," BSP Governor Eli Remolona Jr. told reporters in a briefing late Monday.
In June last year, the RRR of universal and commercial banks and non-bank financial institutions with quasi-banking functions were slashed by 250 basis points to 9.5 percent.
However, Remolona said the 9.5 percent is not low enough, adding the said RRR puts the Philippines as the highest in Asia.
"So, when to do it, and how much would be reduced to the requirement, that's one of the things we want to look forward to," he said.
Sought to comment on whether a cut in RRR is possible within the third quarter of this year, Remolona said "it is unlikely."
Meanwhile, Rizal Commercial Banking Corporation chief economist Michael Ricafort said on Tuesday that the BSP could cut RRR this year or in 2025 if the economic and monetary environment are already conducive to do so.
"Reserve requirements cuts, if already allowed by well anchored inflation and would not lead to higher inflation at some point in the future, would increase banks’ loanable funds," he said.
Ricafort said this will help reduce intermediation costs with lower cost of reserve requirements that will help stimulate more demand for loans, increase investments and other business activities which will lead to faster overall economic growth.
"Every 1 percentage point cut in large banks’ RRR is equivalent to about PHP142 billion infused into the banking system that can be used for more loans, investments, expansion, among other uses of funds," he added. (PNA)
