MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) said yesterday it has cut its rediscount rate by 50 basis points and will raise the budget for the lending facility for the second time in four months to spur lending amid the economic slowdown.
The reduction brings the central bank’s peso rediscount rate – the rate at which it lends to commercial banks – to five percent, the same as its key overnight borrowing rate.
The central bank’s budget for its rediscounting facility would also increase to P60 billion from P40 billion.
“These changes would provide more liquidity and credit in the banking system to ensure the orderly functioning of financial markets should global financial conditions worsen,” the BSP said.
“The liberalized rediscounting guidelines would enable banks to rediscount more loan papers and therefore, have access to additional funds that they can relend to the public,” the BSP said.
The changes, approved by the monetary board last week, will take effect on March 2. [Read full article...]