The Monetary Board decided today to implement a further cut of 50 basis points in both the overnight RRP and RP rates to 12.5 percent and 14.75 percent, respectively, effective Monday, 15 January 2001. This brings the reduction in the BSP’s policy rates to a cumulative total of 250 basis points since 4 December 2000. The tiering system shall continue to apply for overnight placements of banks under the RRP window as follows: 12.5 percent for placements of up to P5 billion, 11.0 percent for the next P5 billion and 9.5 percent for placements in excess of P10 billion.
Broad stability in financial markets, signs of reduced supply-side inflationary pressures in the second half of 2001along with renewed prospects for a timely resolution of the political crisis provide the BSP more scope to implement its commitment to reduce further its policy rates without risking a further upsurge in inflation. This will help in charting a downtrend in inflationary expectations towards the second half of the year.
The monetary authorities shall continue to monitor closely all relevant economic indicators to ensure prompt action against signs of any possible build-up in inflationary pressures.