Rate cuts: Commitment beyond economic recovery
After many quarters of anticipating the rate cut, it felt a little anti-climactic when the first cut was finally announced.
We have been closely watching the global and local policies on interest rates for over a year now, hoping that the easing of interest rates will somehow magically transport us back to pre-pandemic life—low interest rate environment, lower construction costs, lower cost of living, and most importantly, predictable.
Social and economic realities
I realized, however, that we will never go back to the way we lived our lives before 2020. The interest rate is just a sliver of the challenges businesses face as we see the more complex layers of social and economic realities that directly impact the quality of life of many Filipinos.
The truth is, a 25-basis-point cut won’t automatically solve the tangible pinches many Filipinos face: soaring food prices (can we ask the National Economic and Development Authority to show us what a P21 meal looks like?); rising cost of living from rent to real estate prices; inadequate public transportation; and the declining quality of education in public schools, among the host of issues that hound and burden our nation.
New opportunities
But alongside these difficult realities are new opportunities for individuals and businesses alike.
With flexible working arrangements, fast and easy access to information via the internet, connectivity to individuals no longer limited by the 6 degrees of separation—the way of living is changing faster than it ever has.
Filipinos now have the benefit of remote work, and have the ability to earn more from the comforts of their own home. There is also the promise of better infrastructure ahead: new trains, highways and bypass roads that will finally give urban dwellers the option to live outside Metro Manila.
Charles Dickens said it best: “it was the best of times, it was the worst of times”, as many individuals, organizations and societies navigate this new world we live in. Whether or not this was caused by or was an effect of the pandemic, truly the evolution was bound to happen—and we are reminded of the many times man has evolved since the Paleolithic era.
Better quality of life
If I had a magic wand, rates would be back to pre-pandemic levels; government spending would be at an optimum to support the infrastructure development in the regions; and there will be an effective program to improve the quality of education and health of the children.
All these, combined with the rate cuts, will not only contribute to a better quality of life for Filipinos, but will also help accelerate the realization of that aspiration to make all Filipinos part of the emerging middle class.
But alas, there is no magic wand—but surely, the Bangko Sentral ng Pilipinas’ decision to cut rates displays our government’s commitment beyond economic recovery to economic prosperity.
The author is the president of Ovialand Inc., a fast growing developer of affordable horizontal projects in South Luzon
