Central Bank of The Philippines Cuts Rate But Signals Pause

July 9, 2009

A sixth rate since December was announced today, with a size of 25 basis points like the prior three moves.  The first two were by 50 basis points each, so the overnight borrowing rate now becomes 4.0%, down from peak of 6.0% prior to December 18.  Unlike the earlier five reductions, the statement released by the Bank today indicated that policy is now appropriate, being as considerable monetary and fiscal stimulus is in the pipeline.  For a change, officials will now endeavor to achieve a non-inflationary recovery.  Unless the inflation and growth outlooks take a turn downward, the implication is that the coming pause in policy will in fact signal an end to easing.  But no hint has been given about the timing of the first rate hike.

Copyright Larry Greenberg 2009.


Comments are closed.