UPDATE 2-Philippine c.bank opts for deeper rate cut to fight virus fallout

* C.bank cuts rates by 50 bps to 3.25%
* C.bank says ready to use its "full-range" of policy tools
* Coronavirus outbreak to slow growth in the near term

(Adds cbank, analyst comments, details)
By Karen Lema and Neil Jerome Morales
MANILA, March 19 (Reuters) - The Philippine central bank
delivered a larger-than-expected cut in its benchmark interest
rate on Thursday and said it was ready to deploy other policy
tools as it braces for an economic fallout from the coronavirus
outbreak.
The central bank slashed the rate on its overnight reverse
repurchase facility PHCBIR=EC by 50 basis points, which was
greater that the quarter-point reduction predicted by nine of 13
economists in a Reuters poll.
The Philippines was among the first in the region to take
drastic measures to tackle the spread of the respiratory
disease, with President Rodrigo Duterte calling it "the fight of
our lives", after deeming existing curbs on movement and
gatherings insufficient to quell the contagion.
In less than two weeks, the country's coronavirus cases
climbed to 202 from three, with 17 deaths.
"While the enforcement of quarantine measures could help in
slowing the spread of the virus, the resulting disruptions to
industries and private spending are likely to reduce economic
growth in the near term," the Bangko Sentral ng Pilipinas (BSP)
said in a statement.
The rate cut - the fifth such move by the BSP since it began
unwinding policy rate hikes in 2018 - comes as major central
banks move aggressively with emergency rate cuts and offers of
cheap money to combat the impact from the virus.
The U.S. Federal Reserve on Sunday cut its key rate to near
zero in a move reminiscent of the steps taken just over a decade
ago in the wake of the global financial crisis.
The U.S. central bank's decision triggered emergency policy
easings by counterparts in New Zealand, Japan and South Korea
and Australia to help restore confidence as the health crisis
threatened a global recession.
BSP Governor Benjamin Diokno also announced a number of
measures to provide banks access to liquidity and boost lending.
Fears the health crisis might prove much more damaging to
the global economy than initially anticipated have jolted
markets, including the Philippines' main index which crashed as
much as 24% on Thursday, its lowest in more than eight years.
With more than half of the country's population under strict
home quarantine, it is likely that growth this year will slow to
zero, said Alex Holmes, economist at Capital Economics.
The central bank has said it is prepared to use its "full
range of monetary instruments", like reducing banks' required
reserves and suspending its term deposit facility auctions to
support the economy.
The BSP said this year's inflation estimate was lowered to
2.2% from 3.0%, close to the bottom end of its 2%-4% target
range for this year and next. Next year's inflation estimate was
also trimmed to 2.4%% from 2.9%.
ING economist Nicholas Mapa said the Philippines is facing a
"mountain-sized" problem, so apart from a monetary response, the
government will need to step in a big way by using all of its
fiscal space.
"The wheels of the economy that made the Philippines one of
the fastest growing economies in the region have ground to a
halt" Mapa said.