Time to borrow? BSP cuts interest rates

MANILA, Philippines – Monetary officials cut key policy interest rates by 0.25% to 4% on Thursday, March 1.

Low interest rates are meant to spur economic growth by encouraging businesses to borrow for their expansion needs, and for citizens to invest in capital assets, including cars and real estate properties.

This is the second time the policy making body of the Bangko Sentral ng Pilipinas (BSP) cut interest rates this 2012.

In January, the Monetary Board reduced interest rates by 0.25% to 4.25% — the first time since July 2009.

At its meeting on Thursday afternoon, key policy interest rates — overnight borrowing or reverse purchase (RRP) facility and overnight lending or repuchase facility — were reduced to 4% and 6%, respectively.

“The Monetary Board’s decision was based on its assessment that the inflation outlook remained within the target range, with well-anchored inflation expectations,” BSP governor Amando Tetangco Jr. said in a statement.

“At the same time, the Monetary Board noted that domestic demand has continued to grow at a modest pace, reflecting mainly the impact of weaker external demand. Global economic conditions are expected to stay subdued as fiscal and banking sector headwinds in advanced economies affect global growth and as market confidence remains fragile,” it added. – Rappler.com