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BSP Cuts Policy Rates for the 15th Time in 1999

05.21.1999

"The Monetary Board approved a further reduction in the BSP’s policy rates for the fifteenth time during the year effective Monday, 24 May 1999. The RRP rate and the RP rate will be reduced by another 12.5 basis points to 9.875 percent and 11.875 percent, respectively, from their previous levels of 10.0 percent and 12.0 percent, respectively. This move brings the cumulative reduction in both RRP and RP rates since the start of the year to 350.0 basis points from 13.375 percent and 15.375 percent, respectively."

"The reduction in BSP policy rates is consistent with the continued downtrend in the 91-day treasury bill rate which serves as the country’s benchmark interest rate. The said move, which would help sustain the recovery of the stock market and encourage the resumption of credit growth, was made possible with the absence of inflationary pressures as evidenced by the downtrend in the inflation rate. Notwithstanding BSP successive rate cuts, capital inflows remain strong, causing the sustained strength of the local currency."

"The lowering of interest rates is expected to further encourage demand in the economy through higher investments, and hence, would help support the recovery in the real sector, consistent with the national government’s growth objectives for 1999 of 1.5-3.5 percent."

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