UPDATE 1-Philippine c.bank holds fire on rates after strong growth

(Adds quotes, inflation forecasts, background)
* C.bank keeps policy rate steady at 4.00%
* Cbank says firm domestic demand, low inflation to support
growth
* C.bank cuts 2019 CPI forecast but keeps 2020, 2021
estimates

By Karen Lema and Neil Jerome Morales
MANILA, Nov 14 (Reuters) - The Philippine central bank kept
its benchmark interest rate on hold on Thursday, after
surprisingly strong economic growth in the third quarter, saying
that future policy decisions will depend on the health of the
economy and inflation trend.
The Southeast Asian country is one the fastest-growing in
the region, propped up by government spending and strong
consumer demand, but is facing growing risks as global trade
slows from the impact of the Sino-U.S. trade war.
The central bank left the rate on its overnight reverse
repurchase facility PHCBIR=ECI at 4.0%, as correctly predicted
by all 10 economists in a Reuters poll. "The Monetary Board believes that prevailing monetary policy
settings remain appropriate. This is supported by benign
inflation outlook and a firm outlook for domestic economic
growth," Bangko Sentral ng Pilipinas officer-in-charge Francisco
Dakila told a news conference.
The economy clocked stronger-than-expected growth of 6.2% in
the third quarter, giving the authorities more leeway to allow
the effect of previous monetary policy loosening to take effect.
But uncertainties from an unresolved Sino-U.S. trade war,
and questions over the ability of the government to sustain
efforts to catch up with its spending plan, cast a shadow over
the country's growth outlook.
To meet the low-end of this year's 6%-7% growth target, the
economy must grow at least 6.7% in the fourth quarter, a pace
which economic officials have said was doable.
"Next year, the government will be chasing a higher growth
target of 6.5-7.5% and BSP may likely need to shore up the
fiscal stimulus while inflation dynamics allow them to do so",
said ING economist Nicholas Mapa.
Domestic demand, which accounts for just under 60% of the
country's gross domestic product, should continue to get a boost
from slowing inflation, which averaged 2.6% in the nine months
to September, well inside the central bank's 2%-4% target.
The central bank lowered its average inflation forecast for
2019 to 2.4% from 2.5%, but it kept its price projections for
2020 and 2021 at 2.9%.
Nine of the 10 economists in a Reuters poll expected policy
rates would be kept steady for the rest of the year, and the
majority of them said the central bank would resume cutting
rates as early as the first quarter of next year.
Cooling inflation has allowed the central bank to cut
interest rates by a total of 75 basis points this year,
reversing some of last year's rates hikes which totalled 175
bps.
The central bank also reduced the amount of cash that banks
must hold as reserves by 300 basis points, with another cut of
100 bps to take effect in December, bringing the ratio to 14%.

(Editing by Jacqueline Wong)