UPDATE 2-Philippine c.bank stands pat, but signals further easing as global risks rise

* C.bank lowers 2019, 2020 inflation forecasts
* C.bank says domestic activity to remain firm
* C.bank says policy pause allows to assess previous easing

(Adds more details, context on policy and economy)
By Karen Lema and Neil Jerome Morales
MANILA, June 20 (Reuters) - The Philippine central bank kept
its benchmark interest rate steady on Thursday, but left the
door open to further policy easing to guard against rising
economic risks from a heated Sino-U.S. trade war and slowing
global growth.
The central bank held the rate on its overnight reverse
repurchase facility at 4.5%, opting to adopt a wait-and-see
stance to assess the impact of its quarter-point rate cut in May
and a phased reduction in banks' reserve requirement ratio.
"The Monetary Board believes that the manageable inflation
outlook and firm domestic growth prospects support keeping
monetary policy settings steady for the time being", Bangko
Sentral ng Pilipinas (BSP) Governor Benjamin Diokno told a media
briefing.
The governor, however, raised concerns about the risks to
the domestic economy from Sino-U.S. trade tensions and slowing
global growth.
Despite the uptick in last month's consumer prices, the
central bank lowered its inflation forecasts for this year and
next due to declining oil prices and the prospect of a stronger
peso, giving it policy head room to support the economy.
Inflation is now expected to average 2.7% this year and 3.0%
next year, the central bank said, down from its previous
estimates of 2.9% and 3.1%, respectively. Both forecasts are
well inside its 2%-4% target for both years.
"There is room for easing monetary policy because the view
on inflation is quite optimistic", BSP's deputy governor Diwa
Guinigundo said when asked about the outlook for policy.
Only five of 11 economists in a Reuters poll had predicted
no change in rates, with the rest expecting a 25 basis points
cut. Capital Economics said in a note to clients that "with
inflation set to fall back again over the coming months, we
think the central bank will resume its loosening cycle later in
the year."
The Philippines' decision came hours after Federal Reserve
policy review, which as widely expected left rates unchanged
though policymakers signalled possible monetary easing as early
as next month to combat rising economic risks.
Despite slowing growth momentum over the past two quarters,
the Southeast Asian economy has been relatively insulated from a
heated U.S.-China trade war as domestic consumption accounts for
three-fourths of gross domestic product.
As well, a precipitous fall in oil prices have given a boost
to oil importers such as the Philippines and India, helping to
keep inflation under control. The peso PHP=PDSP has also been
fairly stable, allowing the central bank to ease policy without
triggering a sharp fall in the currency.
Indeed, the BSP's signal of possible further easing
underscored concerns among global policymakers of the rising
economic risks, as the Sino-U.S. tariff war hurts global trade
and investment in a blow to world growth.
The Philippine economy expanded at its slowest pace in four
years in the first quarter, and Capital Economics expects growth
to "continue to underwhelm," predicting a second rate cut in
August. Guinigundo said the central bank expects a slight
appreciation in the peso this year to 52.01 against the dollar
from a previous estimate of 52.06. For next year, the peso is
seen firming against the dollar to 51.50 from an earlier
forecast of 51.78.
Policymakers expect government spending to pick up in the
second half after the delay in the budget approval, making this
year's 6-7 percent growth target still feasible.
The peso closed firmer at 51.645 against the U.S. dollar
from Wednesday's 51.890 after the policy decision, while the
benchmark stock index .PSI had ended 0.1% higher ahead of the
rates announcement.