* BSP keeps benchmark RRP rate at record low 2%
* Says inflation manageable, looks broadly balanced
(Adds economist comments)
By Neil Jerome Morales and Enrico Dela Cruz
MANILA, March 25 (Reuters) - The Philippine central bank
kept key interest rates steady on Thursday, balancing the need
to support an economy facing renewed challenges from fresh
coronavirus curbs with concerns about quickening inflation.
The Bangko Sentral ng Pilipinas (BSP) kept the rate on the
overnight reverse repurchase facility PHCBIR=ECI at a record
low of 2.0% for the third consecutive meeting, as predicted by
all 13 economists in a Reuters poll. The rates on the overnight deposit and lending facilities
were also held steady at 1.5% and 2.5%, respectively.
With COVID-19 cases rising, the government reimposed
stricter rules on movement in the capital Manila and nearby
provinces this month, threatening hopes for an economic rebound
after last year's record contraction. L4N2LN233
But there are concerns further monetary easing to boost
support for the economy could fuel inflation, which last month
hit a 26-month high of 4.7%, above the central bank's 2%-4%
target mainly due to food supply-related pressures. BSP Governor Benjamin Diokno said the risk to the inflation
outlook "appears to be broadly balanced" in 2021, although the
central bank raised its inflation forecast for this year to 4.2%
from 4.0% previously.
For 2022, the central bank projects inflation to return to
the target band with the average seen at 2.8%, up from the
previous forecast of 2.7%.
"The Monetary Board is of the view that the manageable
inflation outlook continues to allow the BSP to maintain an
accommodative policy stance," Diokno said in a news briefing.
The BSP's policy statement "suggested a long pause on rates,
balancing the competing considerations of elevated inflation and
an uncertain growth outlook", ANZ economists said in a note.
But they said the BSP has turned "more cautious on the
underlying inflationary impulse, which it now expects to remain
above its target band at least until the third quarter".
Other economists are not ruling out some policy tightening
if inflation does ease back to within the target range soon.
"The central bank may consider a rate hike if inflation
remains stubbornly high, which could dis-anchor inflation
expectations and spark second-round effects such as wage and
transport fare adjustment," said ING senior economic Nicholas
Antonio Mapa.