Manila: Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. has indicated that the Monetary Board might implement several more rate cuts within the year, with at least one reduction being considered for the upcoming rate-setting meeting next month. He shared these insights with reporters during the Tuesday Club meeting held at a hotel in Mandaluyong City.

According to Philippines News Agency, Governor Remolona emphasized that while the policy-making Monetary Board continues on its easing path, the precise timing and extent of any rate cuts will be contingent upon the latest inflation figures and other critical economic markers. He noted that although their measures of policy uncertainty have increased, market measures have not shown a similar trend.

In discussing reserve requirements, the BSP chief mentioned that the current 5-percent reserve requirement ratio (RRR) remains relatively high. However, he stressed that any further reductions should be implemented gradually to ensure proper liquidity management. The RRR serves as a crucial tool for central banks to regulate liquidity in the financial system, requiring banks to retain a certain percentage of their deposits as reserves. By March 28, 2025, the reserve requirement for universal and commercial banks is set to decrease by 200 basis points to 5 percent.

On the topic of gold sales, Remolona addressed recent reports stating that the Philippines led global gold sales last year. He explained that while gold is often perceived as a valuable asset, it is not necessarily a sound investment due to its price volatility and generally low returns. He also highlighted the costs associated with holding gold, such as custody fees, noting that a significant portion of the country's gold assets is stored in the Bank of England.

Governor Remolona elaborated that the Philippines decided to sell some of its gold holdings because the recent rise in gold prices had caused their gold reserves to surpass the ideal ratio of 8 to 10 percent. He clarified that no physical gold had left the BSP, as the transactions involved a transfer of ownership while the gold remained in the Bank of England's vaults. The proceeds from these sales were added to the country's reserves, he added.