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MANILA: Philippine inflation in December eased to the lowest in 12 months as the central bank predicted prices should hold within its 2%-4% target band this year, supporting expectations key interest rates can remain steady for much of 2022.

The Consumer Price Index rose 3.6% in December from a year earlier, slowing for a fourth straight month, due to slower increases in the heavily weighted food index, the Philippine Statistics Authority said on Wednesday.

The headline figure was near the low end of the central bank's projected range of 3.5%-4.3% for the month, and below the 3.8% median forecast in a Reuters poll.

Core inflation, which excludes volatile food and fuel prices, was 3.0%, down from 3.3% in November.

Full-year headline inflation averaged 4.5%, outside the 2%-4% target.

With inflation projected to ease close to the midpoint of the target range for 2022 and 2023, Bangko Sentral ng Pilipinas (BSP) is sticking to its stance of keeping interest rates low.

"Looking ahead, the BSP stands ready to maintain its accommodative monetary policy stance to support the economy's recovery while guarding against any emerging risks to its price and financial stability objectives," BSP Governor Benjamin Diokno said in a statement.

The BSP, which has kept its key rate at a record low of 2.0% since November 2020, will review policy settings on Feb. 17.

It is expected to keep rates steady until the fourth quarter, when there could be a rate hike of 25 basis points, according to a Reuters poll last month.

"Inflation returning to target should allow the central bank to stay put and monitor Omicron and inflation risks," Barclays economists said in a note, adding that BSP could afford not to respond to a possible Federal Reserve rate hike this year.

The base year for computing inflation will be adjusted to 2018 from 2012, starting with January data next month, to reflect changing consumption patterns, the statistics agency said.

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