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MANILA – Banks have passed on to their borrowers only half of the policy rate cuts that the Bangko Sentral ng Pilipinas has undertaken since the start of the year.
BSP Deputy Governor Diwa Guinigundo said only 53 percent of the combined 75 basis points cut in policy rates were passed through in the form of lower loan charges.
“We still have to see interest charges 47 percentage points lower than where they are now,” he said.
The BSP has implemented rate cuts of 25 basis points each in January, March and July.
For the July cut alone, banks have passed through only 27 percent, Guinigundo said.
“We expect a further reduction in market rates because the pass-through rate has not yet been completed. We need to see 9.19 percentage point further reduction in market rates,” he said, adding that the slow pass-through was one reason the BSP kept its key interest rates unchanged during its most recent policy meeting last Thursday.
Guinigundo said the full pass-through impact could take 12-15 months to filter down to the borrower.
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