Philippines CB cuts policy rate for 6th straight time, outlook uncertain

The Philippine central bank cut its key rate for a sixth straight time on Thursday to support growth, adding that the outlook for policy depends on how quickly confidence in the economy returns.

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The move to lower the overnight reverse repurchase rate by 25 basis points to 4.25 per cent came after economic growth slowed to a near five-year low of 3.0 per cent last quarter.

That matched the expectations of most economists in a Reuters poll.

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said the central bank had underestimated the economic impact of the decline in investor and consumer confidence brought about by a corruption scandal late last year.

He said much of the BSP's decision-making would depend on how fast confidence recovers, but stressed that the central bank would continue to support growth to the extent that inflation allows.

“We're less certain about how soon confidence will return,” Remolona told a press conference.

“We also realise that the effect of it, it’s bigger than we thought. So you combine those two things, that makes us less certain of where the economy is heading in the next quarter or so.”

The Philippine peso was largely unchanged against the US dollar and the benchmark stock index also hardly moved following the policy announcement.