Gov Eli eyeing zero RRR in 5 yrs to boost bank lending
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HE Bangko Sentral ng Pilipinas (BSP) could eliminate the Reser ve R e quirement R at io s (R R Rs) in the next five years to help banks increase their lending and investment activities. BSP Governor Eli M. Remolona Jr. said he is keen on bringing down the RRR to zero, effectively eliminating it, within his term. He assumed office in 2023 and is expected to end his term in 2029. The BSP earlier reduced the RRR by 250 basis points (bps) to 7 percent from the initial 9.5 percent. The aim of the central bank is to bring this down to 5 percent in two years.
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“Hanggang 5 percent pinaguusapan na namin pero di pa namin alam kung kailan. [We are talking about bringing down the RRR to 5 percent but we don’t know when]. But we will get there. Mataas pa rin yung 7 [percent] eh [The rates are still high at 7 percent],” Remolona said. Asked whether eliminating the RRR during his term is possible, Remolona said “pwede [its possible].” ANZ Research said in its latest report that the BSP is expected to deliver another 250-bps cut in the RRR until 2025. “[This] should further support risk appetite including banks’ demand for bonds,” ANZ said.
The think tank also said they expect consolidation in the 10-year yields around 5.75 percent by the yearend before a resumption fall towards 5.50 percent in the first semester of 2025. Meanwhile, Remolona also said the BSP could reduce policy rates by 50 bps in one meeting if there are fears of a hard landing. If there are no fears of a hard landing, Remolona said, it is more prudent to deliver a 25-bps cut each in the Monetary Board’s last two meetings of the year. “You’re worried about a hard landing when you consider 50 basis points. If there’s no risk of a hard landing, [25-25 bps
is possible for now]; 25 [bps] is normal. [But] 50 bps means there is a fear of a hard landing,” Remolona said. The last two meetings of the BSP could see 25-basis-point reductions in key policy rates fo l l o w i n g e x p e c t at i o n s t h at inflation could be lower than the August inflation print. If this falls through, the key policy rate will be pegged at 5.75 percent by yearend. This will be the first time interest rates are below 6 percent since December 15, 2022, when key policy rates were raised to 5.5 percent from 5 percent.
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Tuesday, October 1, 2024 Vol. 19 No. 350
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DIP IN RICE, OIL PRICES TO SPUR GROWTH TILL ’26 By Cai U. Ordinario
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@caiordinario
HE expected decline in rice and oil prices could boost the country’s economic growth this year until 2026, according to market analysts.
In its latest Asia economic outlook, ANZ Research said inflation is expected to average 3.4 percent in 2024; 3.2 percent in 2025; and 3.3 percent in 2026. These are within the inflation expectations of the Bangko Sentral ng Pilipinas (BSP). T his w ill help b o ost the countr y ’s economic growth to 5.9 percent in 2024; 5.7 percent in 2025; and 6 percent in 2026. However, all these forecasts remain below the government’s GDP targets at 6 to 7 percent this year; 6.5 to 7.5 percent next year and 6.5 to 8 percent in 2026 to 2028. “Inflation is set to ease materially over the coming months as the reduced tariffs on rice imports soften food inflation, and lower crude oil prices bring down transport inflation,” ANZ said. “Overall, we forecast a GDP growth of 5.9 percent in 2024.” Inflation is expected to slow significantly on the back of lower rice tariffs—reduced to 15 percent from the 35 percent effective in July 2024. See “DIP,” A2
ELEVENTH HOUR FOR VOTERS Voter registrants flock to Comelec satellite offices on the last day of voter registration for the 2025 midterm elections, held at locations like SM City Marikina and Robinsons Manila on Monday, September 30,
2024. Comelec Chairman George Garcia (top right) is seen reading the “Panata Para sa Malinis, Marangal at May Dignidad na Kampanya sa Halalang 2025” ahead of the filing of candidacies for next year’s elections, which will be held on May 12, 2025, with over 18,000 positions up for grabs, including 318 House seats and 12 Senate seats. Comelec’s “Register Anywhere Program,” launched in July 2022, allowed voters to register at malls, churches and plazas to ease access. NONIE REYES & NONOY LACZA
EXPANDED AND NEW ECOZONES SEEN TO BOOST GROWTH, JOBS
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RESIDENT Ferdinand R. Marcos Jr. has proclaimed the expansion of Gateway Business Park and the creation of the NDC Industrial Estate, a new special economic zone, both in Cavite, which are expected to host a locator specializing in metalwork and three companies engaged in production of soap and other detergents, among others, according to the Philippine Economic Zone Authority (Peza). In a statement, the investment promotion agency said on Monday Proclamation No. 699 designates an additional 2,898 square meters
(sq m) of land to the existing Gateway Business Park. This “newly included area,” with a project cost of P380 million, is expected to host a locator specializing in metalwork, said Peza. Meanwhile, Proclamation No. 677 designates more than 191,000 sq m of land for the NDC Industrial Estate, with an estimated project cost of P343 million. “This new ecozone is already set to accommodate three companies engaged in the production of soap and other detergents, renewable See “Expanded,” A2
India easing of rice exports to cool down global prices By Ada Pelonia
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NDIA’S lifting of its export ban on non-basmati white rice would “significantly” push down world and domestic rice prices, according to an economist. This, after Bloomberg recently reported that the world’s largest rice exporter lifted its ban on nonbasmati white rice shipments and set a minimum export price (MEP) of $490 per metric ton (MT). “[This] will significantly lower world and domestic prices. However, the MEP will put a floor on the decline of export price,” Roehlano Briones, a senior research fellow at the Philippine
Institute for Development Studies (PIDS) told the BusinessMirror. University of Asia and the Pacific’s Center for Food and Agribusiness (CFA) Executive Director Marie Annette Galvez-Dacul said India’s return to the export market would help ease global rice supply. “It could stabilize rice prices in countries heavily dependent on its exports, mainly Africa and the Middle East,” Dacul told the BusinessMirror via Viber. However, she noted that for the Philippines, India is a minor source of imports, which accounts for less than See “India,” A2
PESO EXCHANGE RATES n US 55.8920 n JAPAN 0.3929 n UK 74.7556 n HK 7.1910 n CHINA 7.9719 n SINGAPORE 43.6418 n AUSTRALIA 38.5767 n EU 62.3811 n KOREA 0.0427 n SAUDI ARABIA 14.9006 Source: BSP (September 30, 2024)