(Bloomberg) -- The Philippine central bank said it will slash the reserve requirement ratio for large banks by 250 basis points next month, delivering another big cut in RRR in just over a year.
The Bangko Sentral ng Pilipinas said reserve ratios for universal and commercial banks will be reduced to 7% effective October 25, down from the current 9.5%. Digital banks’ RRR will be cut by 200 basis points to 4%, while a reserve ratio reduction of 100 basis points will be implemented for thrift banks and for rural banks and cooperative banks, it said in a statement.
“The BSP emphasizes that these adjustments in reserve requirements are in line with its continuing efforts to reduce distortions in the financial system,” the central bank said. The reductions will also lower intermediation costs and promote better pricing for financial services, it added.
The central bank also said it will reassess the need for further RRR cuts “to better align them with regional norms over the medium term.” The BSP last cut lenders’ reserve ratio in June 2023, also by the same amount.
(Adds more details from statement.)
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