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By Katherine K. Chan<\/b><\/p>\n
FINANCE SECRETARY Ralph <\/span>G. Recto dismissed an \u201coff-cycle\u201d action on monetary policy relaxation <\/span>despite growth in the third quarter being weaker than anticipated,<\/span> but pointed out that there is a significant likelihood of a rate reduction at the upcoming meeting of the central bank.<\/span><\/p>\n \u201cI\u2019m uncertain regarding an \u2018off-cycle\u2019 reduction,<\/span> but there\u2019s a strong probability for a rate decrease before the year concludes,\u201d Mr. Recto informed BusinessWorld<\/i> on the fringes of a Senate hearing on Thursday.<\/p>\n He remarked that the Monetary Board is inclined to lower the primary policy rate by 25 basis points (bps) during the meeting on Dec. 11.<\/p>\n When inquired if there’s a possibility of a 50-bp reduction, Mr. Recto responded: \u201cThere\u2019s always a possibility. It all hinges on the developments. However, I believe there\u2019s a greater likelihood for a 25-bp cut.\u201d<\/span><\/p>\n Bangko Sentral ng Pilipinas (BSP) Deputy Governor Zeno Ronald R. Abenoja told BusinessWorld<\/i> that they have not considered any potential off-cycle monetary policy relaxation.<\/p>\n \u201cI haven\u2019t come across anything,\u201d he stated. \u201cThus, it\u2019s likely just hearsay. To my knowledge, there have been no discussions.\u201d<\/p>\n In October, the BSP reduced borrowing costs by 25 bps to a three-year low of 4.75%. Thus far, it has eased the key policy rate by 175 bps since commencing its easing cycle in August of the prior year.<\/p>\n The weaker-than-expected gross domestic product (GDP) <\/span>growth from the third quarter and <\/span>mild inflation provide the BSP with scope <\/span>for yet another rate reduction in December. <\/span><\/p>\n The Philippine economy expanded by 4% in the third quarter, the slowest growth rate recorded in more than four years <\/span>or since Q1 of 2021. <\/span><\/p>\n BSP Governor Eli M. Remolona, Jr. mentioned in October that they could reduce rates by an additional 25 bps at the Dec. 11 meeting and possibly more in 2026 to bolster the economy amid a slowdown caused by the ongoing flood control scandal.<\/p>\n Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort indicated on Thursday that the third-quarter GDP information has stirred speculation about an off-cycle interest rate cut. <\/span><\/p>\n Mr. Ricafort noted it is \u201cviable, but not guaranteed\u201d for the BSP to decrease rates prior to its scheduled meeting on Dec. 11.<\/p>\n \u201cThere have been whispers in the market since (Wednesday) about a potential off-cycle monetary easing, especially a reduction in large banks\u2019 RRR (reserve requirement ratio), following the lower local GDP growth statistics (on Nov. 7),\u201d he shared via a Viber message on Thursday.<\/span><\/p>\n \u201cEvery single percentage point reduction in large banks\u2019 RRR translates to around P180 billion more liquidity entering the banking system, which could boost lending and other investments such as fixed income or bonds, among others,\u201d he added.<\/p>\n On Feb. 21, the BSP lowered universal and commercial banks\u2019 RRR by 200 bps to 5%, effective the week of March 28.<\/p>\n Meanwhile, Mr. Ricafort observed that the latest third-quarter GDP information has caused the yields on the PHP (Philippine peso) Bloomberg Valuation Service to drop slightly and the peso to fall to a new low against the US dollar.<\/span><\/p>\n On Nov. 12, the peso dropped to a fresh record low after closing at P59.17 against the greenback, slipping by 18.5 centavos from its P58.985 finish on Tuesday. <\/span><\/p>\n