The Monetary Board could be “adding fuel to the fire” with its decision to cut bank reserve requirements, Credit Suisse said, given the view that current policy settings are too loose. “The central bank took pains communicating that this is an operational shift in liquidity management and not a change in monetary policy stance. Nonetheless, we think the BSP (Bangko Sentral ng Pilipinas) risks confusing the market with this move,” the banking giant said in a report released on Monday. “A range of indicators suggest that monetary policy settings could be too loose,” Credit Suisse said, adding that inflation could breach the 2.0-4.0 percent target this year — partly due to higher taxes. The RRR cut would be positive for bank margins but negative for the peso, Credit Suisse said.

Source: Manila Times February 19, 2018 16:18 UTC