Philippines central bank cuts key lending rates by 50 basis points

Friday, December 19, 2008

AFP - Friday, December 19MANILA (AFP) - - The Philippines central bank on Thursday cut its benchmark lending rates by 50 basis points as it switched tack from fighting inflation to boosting growth.
Its first rate cut in 11 months brought the overnight rate to 5.50 percent for borrowing and to 7.50 percent for lending -- their lowest levels since June.
Central bank governor Amando Tetangco said the Monetary Board's action would provide "room for the economy to grow" amid a global financial crisis.
"The Monetary Board believes that with inflation pressures continuing to recede, there is therefore greater latitude to ease policy rates," he said in a statement.
"Given the uncertainty about the duration and the depth of the global downturn, a reduction in policy rates would help avoid credit tightness.
"Such action is expected to reduce domestic borrowing costs, which could stimulate consumer spending and assist sectors such as manufacturing, construction, and small and medium enterprises," he added.
The government said on Wednesday that it expects the economy to grow by between 4.1 and 4.8 percent this year after a three-decade-high gross domestic product growth of 7.2 percent last year.