S&P Upgrade Could Speed Up Philippines Rate Cut, Governor Says

(Bloomberg) -- S&P Global Ratings’ upgrade of the Philippines’ credit score this week could speed up the “inevitable” reduction in Philippine central bank’s policy rate and lenders’ required reserves, Governor Benjamin Diokno.

With the debt rating raised by S&P to BBB+, a notch below the lowest A grade, the central bank “can now move much, much faster this time” on easing, Diokno said in a televised interview from Fiji with ABS-CBN News Channel.

Read S&P’s upgrade on the Philippines

Diokno, who assumed the central bank chief post in March, has repeatedly signaled an openness to cut the key rate and the reserve ratio, which at 18 percent is the highest in Southeast Asia. He said in an interview on April 27 that a rate cut is just a matter of timing.

A 1-percentage point cut every quarter on the reserve ratio is still on the table, ANC said on its Twitter account, citing Diokno. The governor also said in the TV interview that between oil prices and El Nino, he’s more concerned about a prolonged dry spell.

The peso is set for a weekly gain and the main stock index is extending its rally after the April 30 upgrade.

The May 9 policy meeting will come hours after the release of first-quarter growth and days after April inflation data.

--With assistance from Siegfrid Alegado.

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editors responsible for this story: Stephanie Phang at sphang@bloomberg.net, Clarissa Batino

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