By BusinessMirror, March 17, 2020; Business Mirror

The Monetary Board (MB) might trim the interest rates of Bangko Sentral ng Pilipinas (BSP) by 25 basis points (bp) this week to aid the economy currently in slump due to the coronavirus disease 2019 (Covid-19) pandemic.

In an economic research, JPMorgan Chase Bank, N.A. said that the policy cut was backed by declining inflation rate and “easing of external monetary conditions.”

The possible interest rate cut, JPMorgan said, would bring the overnight reverse repurchase (RRP) rate to 3.5 percent.

In February, MB cut BSP’s RRP by 25 bp to 3.75 percent, bringing overnight lending and deposit facilities to 4.25 percent and 3.25 percent, respectively.

The MB last year cut policy rates by a total of 75 bp, with RRP facility ending at 4 percent.

Last month, inflation rate eased to 2.6 percent from 2.9 percent in January and 3.8 percent a year earlier on the back of low food and nonalcoholic beverages prices. The Federal Reserve, meanwhile, recently cut its benchmark interest rate by full percentage point, now ranging within 0 percent to 0.25 percent.

“Thus, we recently penciled in a further 25bp cut in the benchmark policy rate at next…Monetary Board meeting beyond our previous baseline forecast of 25 bp in 2020, to address the growth slowdown,” the bank said.

The National Economic and Development Authority recently said that the country’s gross domestic growth might slow down to 5.5 to 6.5 percent this year due to Covid-19 outbreak. This forecast is below government expectation of 6.5 to 7.5 percent for 2020.

The pandemic has paralyzed the tourism sector because of travel bans as safety precaution. The supply chain was also at risk due to suspension of factory operations, affecting global trade.