To help boost economic recovery, banks need to further increase their lending activities and fiscal measures should be expanded.
The central bank has done the heavy lifting to help buoy the domestic economy from the impact of the pandemic, former Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said recently.
This, after the central bank cut key policy rates by a total of 175 basis points to date, extended temporary borrowing to the national government, and reduced banks’ reserve requirement ratio (RRR).
Guinigundo said real domestic interest rates are now in negative territory due to aggressive cuts in the BSP’s key policy rates.
He said the 2.25 percent rate of the overnight reverse repurchase (RRP) facility is now lower than the 2.5 percent average inflation as of last October.
Thus, Guinigundo said banks should lend more to help fuel more economic activities since domestic liquidity remains ample.
Photo by PNA