* RRR cut to bring ratio to 14%
* C.bank plans to bring RRR to single digit level by 2023
* RRR cut to boost economic growth (Adds more detail, quotes, background)
MANILA, Oct 24 (Reuters) - The Philippine central bank said on Thursday it was cutting the amount of cash that banks must hold as reserves by 100 basis points to 14% to boost liquidity and support growth.
The cut, which takes effect in December, follows a reduction of 100 basis points announced in September to take effect in November, and a 200 bps phased reserve requirement ratio (RRR) cut from May to July.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno has repeatedly said the RRR ratio will be at a single digit level by the time he ends his term as governor in 2023.
“The adjustment in reserve requirement ratios is aimed to ensure sufficient domestic liquidity in support of economic activity,” the BSP said in a statement.
The central bank slashed its benchmark interest rate for a third time this year in September to support economic growth, and Diokno has said it will likely be the last for the year.
Easing inflation has allowed the central bank to reverse some of its policy tightening last year. It trimmed its key rate a total of 50 basis points in May and August.
Growth in the Philippines slipped to its weakest in 17 quarters in April-June, hurt by tepid government spending and private sector investment, with growing risks Southeast Asia’s fifth-largest economy will be hit by the U.S.-China trade war.
“The decision to cut RRR is a proactive and timely one that should help mitigate the impact of global headwinds and this year’s public sector under spending on our GDP performance” said Emilio Neri, economist at Bank of the Philippine Islands.
The central bank has two more policy meetings this year, one in November and another in December. (Reporting by Karen Lema; Editing by Jacqueline Wong)