BSP Governor Flags Easing Measures Amid Controlled Inflation and Economic Shifts

The Philippines’ central bank is eyeing a reduction in benchmark interest rates in 2024, contingent on inflation being brought under control. In a statement on January 12, 2024, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla also hinted at a potential reduction in the Reserve Requirement Ratio (RRR) for banks during the first half of the year.

Medalla emphasized that while strong domestic demand is expected to sustain the economy in 2024, this momentum will likely fade by mid-year. “By 2024, when pent-up demand is gone, monetary policy hopefully at that time will be much looser than what we have now,” he said during a speech at a Rotary Club event.

The governor noted that easing measures, including lowering the RRR, are being considered as part of the BSP’s strategy to support the economy while managing inflationary pressures. He acknowledged the high probability of an RRR cut in the first half of the year as part of the central bank’s broader monetary policy adjustments.