BSP cuts reserve requirement ratio

PHILIPPINES - In Brief 09 Jun 2023 by Romeo Bernardo
The BSP today announced reductions in banks’ reserve requirement ratios (RRR) to be implemented starting June 30. As we had expected, the reduction will coincide with the expiration of a pandemic response measure that allowed loans to small firms to be counted as part of reserves. The BSP emphasized that the cut in RRR is an operational adjustment rather than a shift in monetary policy settings. An inaugural offering of 56-day bills, longer than the 28-day bill that the BSP currently issues, is also scheduled on June 30 to help manage changes in liquidity. With headline inflation continuing to trend down in May (from 6.6% in April to 6.1% in May), Governor Felipe Medalla said he expects monetary policy to remain on pause. Reduction (bp) RRR (%) Universal and commercial banks (U/KBs) and non-bank financial institutions with quasi-banking functions 250 9.5% Digital banks 200 6% Thrift banks 100 2% Rural banks, cooperative banks 100 1%

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