MANILA (Reuters) – The Philippine central bank cut its benchmark interest rate by 50 basis points in an off-cycle move on Thursday, to support an economy facing what the bank’s governor has called a once-in-a-lifetime crisis over the coronavirus.
The cut, the year’s third such move, took the rate on the overnight reverse repurchase facility <PHCBIR=ECI> to a record low of 2.75%. The central bank cut the policy rate by 25 bps in February and by 50 bps in March. Its next meeting is on May 21.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno has flagged the need for “deeper” rate cuts as the Philippines, like many countries, grapples with the severe economic and health effects of the virus pandemic.
Reported infections crossed 2.05 million and more than 136,600 people have died worldwide, a Reuters tally showed by 0200 GMT. The Philippines has 5,453 cases, the highest in Southeast Asia, and 349 deaths.
The Philippines, among the first regional nations to take drastic measures against the virus by ordering quarantine for half of the population of more than 107 million, is forecast to post zero growth this year in the government’s best case scenario.
The Philippines “is now facing a once-in-a-lifetime crisis” calling for “bolder but appropriate moves” by the central bank, Diokno said on Sunday.
The central bank has the authority to slash banks’ reserve requirement ratio (RRR) by 200 bps points more this year. That will be on top of its cut of 200 bps last month in the ratio to boost liquidity in the economy.
Curbs for nearly a month on movement and gatherings in and around the capital, Manila, have dampened domestic consumption, a key driver of economic growth.
(Reporting by Karen Lema and Neil Jerome Morales; Editing by Clarence Fernandez)