UPDATE 1-Philippine c.bank intends to keep rates low, plays down inflation risks

* Dec CPI rises 3.5% yr/yr vs +3.3% in Nov
* Dec core inflation picks up to 3.3%
* C.bank says inflation 'least of our worries'

(Adds detail, quotes, background)
By Neil Jerome Morales and Enrico Dela Cruz
MANILA, Jan 5 (Reuters) - The Philippine central bank
intends to keep interest rates low "for the next few quarters",
Governor Benjamin Diokno said, playing down the risk of higher
prices even as inflation in December hit the highest level since
February, 2019.
The Consumer Price Index rose 3.5% in December from a year
earlier PHCPI=ECI , driven by the heavily-weighted food and
non-alcoholic beverages sector, the statistics agency said on
Tuesday.
The figure topped the median 3.1% forecast in a Reuters poll
and was near the top end of the central bank's projected range
of 2.9%-3.7%.
Full-year 2020 inflation averaged 2.6%, still comfortably
within the official target range of 2%-4%.
Core inflation PHCPXY=ECI , which excludes volatile food
and fuel prices, picked up to 3.3% from 3.2% in November.
In an interview with ANC News Channel, Diokno described the
uptrend in inflation as "transitory" and said it was "the least
of our worries".
In a separate statement, he said December inflation
reflected the short-term impact of weather disturbances. The
Philippines was hit by a series of powerful typhoons late last
year.
"The overall balance of risks to future inflation continues
to lean toward the downside owing mainly to the continued
uncertainty caused by the pandemic on domestic and global
economic activity," he said.
The Bangko Sentral ng Pilipinas slashed interest rates by a
cumulative 200 basis points last year, making it one of the most
aggressive central banks worldwide in policy easing.
It also provided extra liquidity support by purchasing
government securities and extending loans to the government.
The central bank is set to review monetary policy on Feb.
11.
Michael Ricafort, chief economist at Rizal Commercial
Banking Corp, said inflation should now remain benign until
February, justifying more monetary easing, before prices
potentially push higher again from March.