Banks have the flexibility to reduce their lending rates further to get closer to, if not match, the aggressive policy rate reduction by Bangko Sentral.
“There is more room to go on the downside for bank lending rates,” Bangko Sentral Gov. Amando Tetangco Jr. said during the induction of the board of trustees of the Chamber of Commerce of the Philippines Foundation Inc. at the Manila Golf & Country Club in Forbes Park, Makati City on Tuesday night.
The Monetary Board, the policy-making body of the central bank, have slashed the key policy interest rates by a total of 200 basis points since December 2008.
The rate cuts brought down to 4 percent the overnight borrowing rate, or the reverse repurchase facility, and to 6 percent the overnight lending, or repurchase facility, in the second week of July.
It was the sixth time since December 2008 that the central bank had cut its policy interest rates. There are expectations that the central bank would cut again the policy rates in the next meeting of the Monetary Board.
Tetangco said that while the central bank reduced the policy rates by a total of 200 basis points since December, banks have trimmed their lending rates by only 100 to 150 basis points.
Latest data showed that during the period July 20 to 24, bank lending rates averaged 8.131 percent, with a range of 7.2669 percent to 9.2718 percent.
“We don’t expect banks to cut their lending rates by the same amount [200 basis points],” Tetangco said, while quickly adding that banks should pass to their borrowers at least 70 percent of the central bank’s policy rate reduction. –Roderick T. dela Cruz, Manila Standard Today
Invoke Article 33 of the ILO constitution
against the military junta in Myanmar
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against serious violations of Forced Labour and Freedom of Association protocols.
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