GDP growth accelerated to 6.2% YoY in 3Q19 (from 5.5% in 2Q19), higher than consensus expectation of 6.0%. This was driven mainly by a recovery in government spending following the 2019 budget impasse and ban on government spending during the mid-term elections.

As expected, the Federal Reserve reduced policy rate a third time this year by 25 bps to 1.50-1.75%. However, the Fed sounded a hawkish tone as it gave an overall positive assessment of the US economy and highlighted receding risks from the US-China trade war and Brexit.

The BSP announced another 100-basis point (bp) cut in the reserve requirement ratio (RRR) for universal/commercial banks and thrift banks effective Dec 2019. This will bring the RRR to 14%, 400 bps lower from when the BSP announced the first RRR cut in May. The move is in line with the broad financial sector reform agenda to lower intermediate costs and to ensure sufficient domestic liquidity to support growth.