The Monetary Board decided today to cut anew by 50 basis points the overnight RRP and RP rates to 10.50 percent and 12.75 percent, respectively, effective Monday, 12 March 2001. This brings the cumulative reduction to 450 basis points since December last year.
The tiering system shall continue to apply for overnight placements of banks under the RRP window as follows: 10.5 percent for placements of up to P5 billion, 9.0 percent for the next P5 billion and 7.5 percent for placements in excess of P10 billion.
The Monetary Board took into account the broad stability in the foreign exchange market, comfortable interest rate differentials, and favorable inflationary expectations in the second half of the year in reaching its decision. The Board also considered the balance of risks between output and inflation. With the external weakness posed by the slowing down of the U.S. economy and other major economies, and with inflation contained, some easing of the monetary policy setting is warranted.
While the inflation outlook appears benign, the BSP will continue to keep an eye on key developments in the financial markets and the rest of the economy to guard against emerging threats to the price stability objective of the BSP.