26.9 C
Manila
Friday, January 28, 2022

BSP: Liquidity infusion of P2.2T will prevent economic scarring

- Advertisement -

BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno reported that the Central Bank has infused a total of P2.2 trillion of liquidity into the country’s financial system as of June 3.

Diokno told reporters in a briefing on Thursday that the P2.2-trillion total liquidity injection through the BSP’s policy and liquidity-easing measures has provided “significant support” to the local economy.

In 2020, the BSP reduced the country’s policy rate by a cumulative 200 basis points. It has also made provisional advances to the national government (NG) and purchased government securities in the secondary market.

Diokno also moved to cut the reserve requirement ratios (RRR) by 200 basis points for universal and commercial banks and non-bank financial institutions with quasi-banking licenses, as well as by 100 basis points for thrift banks and rural/cooperative banks.

The governor said the BSP’s total liquidity injection amounted to 12.13 percent of the country’s full-year nominal GDP for 2020.

“Amid heightened uncertainty in the Covid-19 pandemic, monetary policy has continued to focus on supporting economic activity and market confidence. Thus, the BSP decided to mobilize its monetary instruments and other extraordinary measures to avert liquidity strains and to prevent long-lasting scarring in the domestic economy,” Diokno said.

Going forward, Diokno said the BSP will continue to “prioritize” the use of monetary policy space to “provide support to economic activity amid the pandemic as key sectors transition to the post-pandemic phase.”

For 2021, the BSP retained its record low interest rates on hold in its first three meetings of the year despite inflationary pressures. Diokno said the decision to maintain low rates is anchored on their focus to support the economy while inflationary pressures continue to be “transitory” in nature.

However, Diokno said that the BSP continues to be mindful of emerging price conditions.

“The BSP shall remain vigilant to ensure that policy responses will neither lead to excessive inflation nor trigger financial stability risks, especially as economic recovery gets under way,” Diokno said.

The BSP monetary board is expected to have its next Monetary Policy meeting on June 24. This will be the Central Bank’s fourth policy meeting for the year.

Read full article on BusinessMirror

- Advertisement -

Related Articles

- Advertisement -

SURVEY QUESTION OF THE WEEK

Kailangan bang may malawak na karanasan at mataas na pinag aralan ang mga tatakbo sa pagka Presidente at Bise Presidente? Oo o Hindi?

- Advertisement -

Latest Articles

- Advertisement -