Remolona: Economy can absorb up to 6.8% policy rate

THE Philippine economy can absorb the impact of a policy rate of as much as 6.8 percent to fuel its growth in the long-run, according to the Bangko Sentral ng Pilipinas (BSP).

BSP Governor Eli M. Remolona Jr. disclosed at a Senate Committee on Finance hearing that a 6.8-percent policy rate in nominal terms would be “just right” to support the economy’s growth in the “long-run.”

“If we talk about the real rate, we remove the 3-percent inflation from the 6.25 percent, then the real interest rate of borrowing is 3.25 percent,” Remolona told senators, speaking partly in Filipino.

“That is quite low. Our estimated rate that is just right for [the long run for the economy to