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May 27, 2024

BSP open to further RRR cuts, timing still under discussion

The Bangko Sentral ng Pilipinas (BSP) remains open to reducing banks’ reserve requirement ratio (RRR) again, but Governor Eli Remolona Jr. emphasized a cautious approach in determining the right timing.

“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,” Remolona told reporters.

This comes after a previous RRR cut in June 2023, which lowered the requirement for universal and commercial banks, as well as non-bank financial institutions with quasi-banking functions, by 250 basis points to 9.5%.

While acknowledging the current rate is still relatively high compared to other Asian economies, Remolona did not provide specifics on the potential size or timeframe of the next reduction.

“We’re still evaluating the best approach – when to implement it and by how much,” he said.

Remolona said a cut in the third quarter is unlikely.