BSP eyes more rate cuts

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. expects the Monetary Board “to cut a few more times” this year, noting that a reduction is “on the table” during next month’s policy meeting.

Speaking to reporters last week, he said the MB remains in an easing cycle but emphasized that the timing and magnitude of rate cuts will depend on inflation data and other economic indicators.

“So far, our measures of policy uncertainty have spiked. But the market measures of uncertainty have not really spiked,” he said during the Tuesday Club meeting in Mandaluyong City.

Regarding the reserve requirement ratio (RRR), Remolona acknowledged that the current 5 percent level is still high, but he stressed that further reductions should be gradual to ensure proper liquidity management.

Effective March 28, 2025, the reserve requirement for universal and commercial banks will be lowered by 200 basis points to 5 percent.

Meanwhile, Remolona addressed reports that the Philippines sold the most gold globally last year. He explained that while gold is a valuable asset, it is a poor investment due to price volatility and low returns.

He also noted that holding gold comes with costs, such as custody fees, as most of the country’s gold reserves are stored at the Bank of England (BOE).

“Now that gold prices have increased, the amount of gold we hold has exceeded the ideal ratio of 8 to 10 percent, so we decided to sell,” he said in mixed English and Filipino.

“No gold has left the BSP. The gold was sold, but it was likely bought by someone who also keeps it at the Bank of England—it was just transferred to a different cage. However, the payment went into our reserves,” he added.