For the third time this year, the Philippines has cut rates it pays on special deposit accounts in an effort to curb capital inflows and prevent asset bubbles.
The country's central bank, the Bangko Sentral ng Pilipinas, has lowered the rate on its SDAs to just 2% effective immediately. The announcement had been earlier forecasted by twelve of the sixteen economists that Bloomberg News has sought opinions for. The overnight deposits rate was also pushed to its all-time low of 3.5%, a move also predicted by nineteen economists.
The Southeast Asian country had been granted its first investment-grade ranking from Fitch Ratings just last month. It is seeking to limit the surge in capital inflows that has caused a surge in property prices and boosted stocks to a record high this week. According to the World Bank, the policies easing in developed nations would add pressure on inflation levels and asset prices in emerging countries in Asia.
In a previous move, the BSP also relaxed the limits on dollar purchases that restrain the Philippine peso by doubling the amount of dollars residents can buy freely to broaden as well as expand the approved outward investments to boost outflows.
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