BORACAY: The Philippine central bank kept its benchmark interest rate at a record low on Thursday, maintaining support to ensure a sustained recovery for the Southeast Asian economy even as it warned of risks to inflation next year.
The Bangko Sentral ng Pilipinas (BSP) kept the rate on the overnight reverse repurchase facility at 2.0%, as expected by all 19 economists surveyed by Reuters.
The rates on the overnight deposit and lending facilities were kept at 1.5% and 2.5%, respectively.
"On balance, the sum of new data suggests that there remains scope to hold monetary policy settings steady amid a manageable inflation environment," BSP Governor Benjamin Diokno said.
"Keeping a patient hand on the BSP's policy levers, along with appropriate fiscal and health interventions, will keep the economic recovery more sustainable over the next few quarters," he told reporters at a news conference on the resort island of Boracay.
The Philippines, which suffered one of Asia's worst outbreaks of the pandemic, slashed its growth target this year to 4%-5% from 6%-7%.
A decline in infections has allowed for a gradual easing of curbs, with more businesses reopening and helping the recovery gain some momentum in recent months.
Annual economic growth slowed less than expected in the third quarter, putting the country on course to meet, if not exceed, its 2021 target, with domestic demand likely to further pick up in the fourth quarter due to holiday spending and easing of curbs.
Diokno had said on Sunday the BSP may continue its accommodative policy stance even as it expects the economy could exceed the government's growth target this year.
The government has ramped up its vaccination drive, having inoculated more than a quarter of its 110 million population, and is hoping to further relax mobility curbs by early 2022.
While the risks to the inflation outlook have shifted towards the upside for 2022, Diokno said they remain broadly balanced for 2023.
Annual inflation slowed to a three-month low of 4.6% in October but was still above the 2%-4% target band for the year.