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Thursday, May 23, 2024

BSP plans to cut reserve requirement ratios

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The Bangko Sentral ng Pilipinas (BSP) may further reduce banks’ reserve requirement ratios (RRR) this year, Governor Eli Remolona Jr. said Wednesday.

“We’ve lowered our reserve requirements quite a bit. I think there’s room to lower them some more,” Remolona said in a news briefing.

Reserve requirements are the minimum reserves required for depository institutions. They are set by the central bank within limits specified by law. A change in the minimum reserve ratio affects the amount of its deposit base a financial institution can lend out.

The BSP in June 2023 reduced the RRR by 250 basis points, or 2.5 percent, for universal and commercial banks and non-bank financial institutions with quasi-banking functions or NBQBs, 200 bps or 2 percent for digital banks and 100 bps, or 1 percent, for thrift banks, rural banks and cooperative banks.

The reduction brought the RRRs of universal and commercial banks and NBQBs from 12 percent to 9.5 percent; digital banks from 8 percent to 6.0 percent; thrift banks from 3 percent to 2 percent; and rural and cooperative banks from 2 percent to 1 percent.

Meanwhile, Remolona said that the BSP is monitoring the rice prices amid the El Niño threat that could affect inflation rate.

The Philippine Statistics Authority earlier reported that inflation rate in February picked up to 3.4 percent from 2.8 percent in January, on higher food, beverage and transport prices.

Food inflation accounted for 49.6 percent of the total price increase in February. Rice remained the top contributor to the month’s inflation, accounting for 2.1 percentage points, while the slight acceleration in meat inflation was attributed to price increases in pork and beef.

The National Economic and Development Authority (NEDA) earlier said the government was intensifying efforts to mitigate the effects of the El Niño dry spell and help keep the inflation rate within target.

NEDA Secretary Arsenio Balisacan said the government would continue monitoring food supply and prices and implement necessary policies and strategies to ensure affordable and adequate food for Filipino families, especially those from the most vulnerable sectors.


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