The Bangko Sentral ng Pilipinas (BSP) announced on Thursday a reduction of its policy rate by 25 basis points (bps), marking the beginning of an easing cycle in response to anticipated softer inflation.
Bps is a unit of measure commonly used to describe changes in interest rates, bond yields, and other financial instruments. One basis point is equal to one one-hundredth of a percentage point (0.01%). Therefore, a change of 25 basis points is equivalent to a 0.25% change.
The decision by the Monetary Board, BSP’s highest policymaking body, led to the adjustment of the key rate to 6.25 percent.
This move signals a proactive stance by the central bank in stimulating economic growth and mitigating inflation pressures in the current economic landscape.
The last instance of the BSP lowering the policy rate occurred on November 19, 2020, amidst the recession triggered by the pandemic, when borrowing costs were brought down to a historic low.
Boracay, as a prominent tourism destination in the Philippines, stands to benefit from the BSP’s interest rate cut. The reduction in borrowing costs can potentially stimulate investments in tourism-related infrastructure and services on the island.
Lower interest rates may encourage businesses in Boracay to expand, renovate, or launch new initiatives, ultimately enhancing the overall visitor experience.
As businesses in the tourism sector thrive with improved access to financing, Boracay could see a boost in economic activity and job creation, further solidifying its reputation as a premier travel destination in the region.
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