UPDATE 1-Philippine cbank pauses easing as signs of economic recovery emerge

* Benchmark rate kept steady at record-low 2.25%
* Cbank sees signs of recovery in economic activity
* Cbank relaxes limit to real estate lending
* GRAPHICS: Philippines economy indicators interactive http://tmsnrt.rs/2nZqDWx

(Adds comments, more details, graphic)
By Neil Jerome Morales and Enrico Dela Cruz
MANILA, Aug 20 (Reuters) - The Philippine central bank kept
its policy rates steady on Thursday, saying there was no
compelling reason for a further reduction as it saw signs of a
rebound in economic activity with the gradual easing of
coronavirus lockdowns.
It maintained the rate on the overnight reverse repurchase
facility PHCBIR=ECI at a record-low 2.25%. Rates on the
overnight deposit and lending facilities were likewise kept
steady at 1.75% and 2.75%, respectively.
Thirteen out of 15 institutions surveyed by Reuters had
expected the Bangko Sentral ng Pilipinas (BSP) to pause monetary
easing after slashing rates by 175 basis points this year, while
two had predicted a 25-50 bps cut. "The Monetary Board's decision was based on its assessment
that the inflation environment remains benign," BSP Governor
Benjamin Diokno, reading a prepared statement at a virtual media
briefing.
The central bank revised up its average inflation forecasts
to 2.6% for this year, from 2.3% previously, and to 3% for next
year, from 2.6%, still well within the 2%-4% target range for
both years.
"At the same time, the Monetary Board observed early signs
of recovery in domestic economic activity with the gradual
easing of lockdown restrictions, supported by ample liquidity in
the financial system," he said.
Such support was further bolstered with his announcement
early in the day of an increase in real estate lending, giving
big banks more leeway to finance the property sector as the
country gradually eases lockdown restrictions. The Philippine economy fell into recession for the first
time in 29 years with a record slump in the second quarter, as
strict virus containment measures hit businesses and consumers.
Mindful of the economic fallout from the restrictions, the
government on Wednesday relaxed a lockdown in the capital and
nearby provinces, allowing more businesses to resume operations
even as new infections continue to rise. The Southeast Asian country leads the region in the number
of coronavirus infections, with cases of close to 180,000 and
deaths of nearly 2,900. Diokno said the the recent rate cuts and other monetary and
regulatory relief measures needed time to fully work their way
through the economy.
However, he reiterated the BSP remains "committed to
deploying its full range of instruments as needed".
"The case for more easing is clear....The recovery looks set
to be slow and fitful," Alex Holmes, Asia economist at Capital
Economics, said in a note to clients, predicting further policy
rate cuts in coming months.
Lawmakers on Thursday approved a stimulus package worth up
to 165 billion pesos ($3.39 billion).