By Lee C. Chipongian The Bangko Sentral ng Pilipinas (BSP) is not ruling out another interest rate cut of as much as 50 basis points (bps) to offset the damage of the COVID-19 lockdown on economic growth. “The BSP has already cut the policy rate by 75 bps thus far in 2020. We will continue to monitor the situation to determine if further reductions are warranted,” the BSP said Friday, a day after the Monetary Board reduced benchmark rate by 50 bps, a follow-through of its first 25 bps cut last February 6. When asked if 75 bps is enough to protect 6 percent 2020 growth forecast that BSP Governor Benjamin E. Diokno said earlier, the central bank said that “So far, with a subdued inflation environment, which could feed into expectations” the recent 50 bps rate cut is “appropriate to support the country’s growth momentum and uplift market confidence against stronger headwinds.” “At the same time, the BSP is looking into a range of other supplementary measures that may be required to support non-inflationary and sustainable growth over the medium term. These supplemental actions are aimed at ensuring adequate domestic liquidity and credit in the financial system as well as lowering borrowing costs for affected firms and households,” the BSP said. These include, but are not limited to, recalibrating the interest rate corridor settings, suspending the term deposit facility (TDF) auctions as market conditions warrant, and ensuring banks’ access to liquidity- enhancing facilities such as the rediscounting facility. “(In the meantime) due to the medical nature of the shock, a combination of targeted and well-coordinated health, fiscal, and financial market measures will be crucial in limiting the economic fallout from the pandemic. In this regard, we believe the National Government has ample fiscal space for such measures, as reflected in its low debt-to-GDP ratio,” said the BSP. Last March 19, the Monetary Board revised the 2020 inflation forecast lower to 2.2 percent from the previous three percent (February 6 forecast), and the 2021 estimate is now 2.4 percent from 2.9 percent, mainly due to sharp decline in global crude oil prices and the impact of COVID-19 on global and domestic growth. The BSP said the COVID-19 outbreak will have a negative impact on global manufacturing and trade, and that the “ongoing health and quarantine measures to contain it could likely dampen domestic demand, thus contributing to reduced inflation pressures in the coming months.” “Additionally, the sharp decline in global commodity prices, particularly crude oil, on market concerns over a potential slowdown in global economic activity, can further temper inflationary pressures,” said the BSP, adding that the government’s price freeze for basic commodities, several food items, and medicines, will also help curb price pressures. The BSP has said that the impact of COVID-19 on domestic economic growth will be mostly felt by the services sector such as tourism, trade, and remittances channels. The enhanced community quarantine will only dampen growth further. “The latest assessment assumes a U-shaped recovery with the impact of COVID-19 lasting until the second half of 2020 but with the economy expected to rebound by 2021,” said the BSP. In the next weeks and months, the central bank said they are prepared to utilize the “full- range” of its monetary tools and to approve more regulatory relief measures if required. “In calibrating its monetary policy settings, the BSP will continue to be data-dependent, guided by our inflation outlook over the policy horizon and the risks surrounding such outlook as well as data on demand conditions,” said the BSP.