The Bangko Sentral ng Pilipinas (BSP) is laying the groundwork for further interest rate reductions this year, with Governor Eli Remolona Jr. indicating a potential cut could be on the table at the next policy meeting.
“So far, our measures of policy uncertainty have spiked. But the market measures of uncertainty have not really spiked,” Remolona told reporters, emphasizing the central bank’s focus on inflation and economic data to guide its easing cycle.
While the BSP is moving to loosen monetary policy, it is taking a measured approach to liquidity management. Remolona acknowledged the current 5% reserve requirement ratio (RRR) for banks is still elevated, but stressed that any further cuts will be implemented gradually.
A 200 basis point reduction is already scheduled for March 2025.
Remolona also addressed the BSP’s recent gold sales, clarifying that the move was driven by rising gold prices pushing reserves above the central bank’s target range.
He characterized gold as a volatile and low-return investment, despite its role as a store of value.
Investors are now closely watching upcoming inflation figures and global economic trends for further clues on the timing and extent of the BSP’s future rate adjustments.
