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UPDATE 1-As coronovirus fallout deepens, Philippine c.bank says may consider more rate cuts

Published 02/27/2020, 04:43 PM
Updated 02/27/2020, 04:48 PM
UPDATE 1-As coronovirus fallout deepens, Philippine c.bank says may consider more rate cuts

UPDATE 1-As coronovirus fallout deepens, Philippine c.bank says may consider more rate cuts

* Central bank committed to another 25 bps cut this year
* Growth may hit 6.0% this year
* Inflation may slow due to lower oil prices

(Adds more quotes, background)
MANILA, Feb 27 (Reuters) - The Philippine central bank will
consider more cuts in its key policy rate and banks' required
reserves if the economic impact from the coronavirus epidemic is
likely to be much worse than expected, its governor said on
Thursday.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said he
remains committed to cutting interest rates PHCBIR by another
25 basis points this year after the quarter-point cut in
February that brought the policy rate to 3.75% But "if things deteriorate much beyond what we have
originally forecasted, we might consider additional cuts in
reserve requirements or policy rate," Diokno told reporters.
The central bank previously estimated the virus outbreak
could shave up to 0.2 percentage points off first quarter growth
and 0.4 percentage points off second quarter growth, but Diokno
said the forecasts are now being reviewed.
"We realised that the analysis that we did earlier may not
be appropriate anymore given" the epidemic has taken more of a
sinister twist, Diokno said.
The central bank cut its interest rates on Feb. 6, the
fourth such move since it began unwinding the 2018 policy rate
hikes totalling 175 basis points last year, to support growth.
It also cut banks' reserve requirement ratio (RRR) by a
total 400 bps last year to 14%.
With inflation expected to slow due to lower oil prices and
as consumers spend less on travel and tourism due to the virus
scare, the central bank has policy space to support economic
activity if needed, Diokno added.
He said growth will probably hit 6.0% this year, below this
year's 6.5%-7.5% growth target.


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