In a statement, BPI said foreign banks have long enjoyed an advantage by funding their Philippine operations with cheaper offshore deposits, but this move helps level the field, giving domestic lenders more flexibility to compete.
The cut also comes at a crucial time for banks hit by a real estate downturn and the exit of Philippine Offshore Gaming Operators, or POGOs, which once drove significant demand for office space and financing, the bank said.
“The RRR cut is anticipated to boost lending, providing banks with greater flexibility in allocating resources,” BPI said.
Despite concerns about inflation, the BSP’s decision to keep policy rates steady ensures that the added liquidity won’t immediately overheat the economy.
“The financial system is well-positioned to absorb the additional liquidity in an orderly manner, thanks to the central bank’s other tools for managing excess liquidity (e.g., liquidity coverage ratios, macroprudential lending limits, forward guidance, open market operations, etc.)," BPI said.
“Banks have also gained valuable experience in managing liquidity from recent RRR reductions, ensuring a smooth implementation of this policy change,” it added.
