* Benchmark RRP rate cut to record-low 2.25%
* Cbank says global growth outlook has worsened
* Cbank lifts 2020, 2021 inflation forecasts
* GRAPHICS: Philippines economy indicators interactive http://tmsnrt.rs/2nZqDWx
(Adds quotes, more details, graphics)
By Neil Jerome Morales and Enrico Dela Cruz
MANILA, June 25 (Reuters) - The Philippine central bank
unexpectedly cut its benchmark interest rate by another 50 basis
points to a new low on Thursday, extending an aggressive policy
easing cycle to cushion the economic blow from the coronavirus
pandemic.
The cut was the fourth this year, and took the rate on the
overnight reverse repurchase facility PHCBIR=ECI to 2.25%. The
central bank has now slashed the rate by 175 bps since February.
Rates on the overnight deposit and lending facilities were
likewise reduced to 1.75% and 2.75%, respectively.
Eight out of 12 economists in a Reuters survey had expected
the central bank to keep the rate steady, while the other four
had forecast a 25 bps cut.
"The Monetary Board decided that a further reduction in the
policy rate amidst a benign inflation environment would help
mitigate the downside risks to growth and boost market
confidence," Bangko Sentral ng Pilipinas (BSP) Governor Benjamin
Diokno said.
Activity has slowed due to a coronavirus-induced lockdown,
while the outlook for global growth has deteriorated, he said.
The BSP forecast inflation to average 2.3% this year and
2.6% in 2021, higher than the April estimates of 2.0% and 2.45%,
respectively, but well within the official target of 2%-4% for
both years.
The BSP remains committed to deploying a full range of
monetary instruments and regulatory relief measures as needed to
support growth, Diokno said.
"The surprise cut is seen as a pre-emptive monetary easing
measure needed most by the economy at this time and in the
coming months," said Michael Ricafort, economist at Rizal
Commercial Banking Corp in Manila.
Further easing may be needed to prevent the economic
contraction from deepening, Ricafort said.
The Philippine economy is expected to contract 3.8% this
year, the Asian Development Bank (ADB) said last week.
"After the flurry of rate cuts and infusion of liquidity,
today's move may be the last from the BSP in 2020 with Diokno
likely in favor of approximating positive real policy rates,"
ING said in a note.
"Meanwhile, Governor Diokno will also likely hold back on
reducing reserve requirements in the near term given that the
financial system is swamped with liquidity with excess funds
parked at BSP's deposit facilities hitting roughly 1.3 trillion
peso in June."