Philippine monetary board lowers interest rates by 50 basis points

The Philippine monetary board lowered key interest rates by 50 basis points effective Monday, in a move that paralleled the US Federal ReserveƆs cut last Wednesday.

After the cut, the overnight RRP (reverse repo) rate will be 11.5%, while the RP (repurchase) rate will be 13.75%. This is the fourth rate cut for the year.

The tier system for overnight placement by banks under the RRP window will be maintained. For placements up to Ps5 billion, the rate will be 11.5%, for the next Ps5 billion it will be 10%, and for placements over Ps10 billion it will be 8.5%.

The central bank has acknowledged that the US rate cut was a major factor behind the move, together with its view on the country’s inflation trend.

The monetary board is the highest monetary policy making body in the Philippines. While the country changed presidents on January 20, Rafael Buenaventura remains the central bank governor because his term is fixed by law until 2006.