Euben Paracuelles, economist at Nomura Securities Ltd., said the 200-basis point reduction in the RRR has a generally positive effect on the economy. Paracuelles said the BSP seen slashing the RRR level by another 100 basis points as well as benchmark rates by another 25 basis points before the end of the year. HSBC sees no further cuts in RRR this year, but expects another 25-basis point cut in interest rates by the third quarter. Roces said the gradual RRR cuts is estimated to inject approximately P200 billion into the financial system, causing the peso to face stronger depreciation pressures with more money circulating in the economy. The Monetary Board was originally looking at four 50 basis point cuts, but decided to be more aggressive starting with a 100 basis point cut on March 31 followed by 50-basis point cut on June 28 and another 50 basis points on July 26.

Source: Philippine Star May 17, 2019 16:00 UTC