The reserve requirement ratio for Philippine banks is "very high" and could be cut over the next four quarters by about 1 percentage point each quarter, new Bangko Sentral ng Pilipinas Governor Benjamin Diokno told ABS-CBN News in a television interview.
The central bank lowered the reserve requirement ratio for Philippine commercial banks by 200 basis points in 2018 to 18%, which remains among the highest ratios within Southeast Asia. The first cut took effect in March 2018, followed by another 100-basis-point reduction in June 2018.
"I'm convinced there's room for monetary easing," Diokno reportedly said, citing cooling inflation in the Philippines and the U.S. Federal Reserve's patience regarding the future path of its own interest rate hikes. The governor expects the country's inflation to be "right smack" at 3.0% in 2019, the midpoint of the central bank's target range of 2% to 4%.
Diokno, who most recently served as the Philippines' budget secretary, took over as Bangko Sentral ng Pilipinas governor after predecessor Nestor Espenilla Jr. died of cancer Feb. 23. The central bank's rate-setting monetary board will meet under Diokno for the first time March 21.