The Philippine central bank on Thursday announced key policy interest rates cut by 25 basis points to ensure liquidity and ensure market confidence amidst a global economic crisis.

The overnight borrowing rates or reverse repurchase facility (RRP) was reduced to 4. 5 percent while overnight lending or repurchase facility (RP) was cut to 6.5 percent.

The interest rates on terms RRPs, RPs and special deposit accounts were also reduced accordingly.

This is the fourth consecutive time that the Philippine central bank has reduced its key policy rates.

The central bank has reduced key policy rates since December 2008. This has brought the cumulative reduction in the central bank's rates to 150 basis points.

The current RRP is the lowest since May 15, 1992.

The Philippine Monetary Board decided to cut rates anew on expectations of easing inflation levels in 2009 and 2010, waning demand due to global recession and low commodity prices, Philippine central bank governor Amando Tetangco, Jr. said in a press briefing.

"Upside risks, remain however and these are linked to the volatility in exchange rates and the prices of oil and some food products as well as increases in utility rates," Tetangco said.

By lowering key policy rates, Tetangco said Philippine monetary officials believed that this would reduce the cost of borrowing and promote wider access to domestic financing.

The Philippine government may soon reduce its growth forecast this year as the global recession dampens exports and hurts the inflow of remittances.

The GDP growth forecast in 2009 is seen to be lowered to a range of 3.1 percent to 4.1 percent.

(Xinhua News Agency April 16, 2009)