MANILA - (UPDATE) The Bangko Sentral ng Pilipinas on Thursday kept borrowing rates steady, even as faster-than-expected inflation put pressure on regulators to tighten policy.
The policy-making Monetary Board maintained the overnight borrowing rate at 3 percent, unchanged since September 2014. Twelve in 17 analysts polled by Bloomberg News predicted no change in the key rate.
"The Monetary Board stands ready to take appropriate measures as necessary to ensure that the monetary policy stance continues to support price and financial stability," Governor Nestor Espenilla said in a statement.
Espenilla said the Monetary Board recognized that risks to the inflation outlook "remain weighted toward the upside" and is "anchored within the inflation target band over the policy horizon."
"The BSP is watchful against any signs of second-round effects and inflation becoming broader based," he said.
Consumer prices rose 4 percent in January, hitting the top end of the BSP's target of 2 to 4 percent and exceeding analysts' expectation of 3.5 percent.
Higher duties on fuel, sugar-sweetened drinks and cars took effect on Jan. 1, the first month of implementation of the Tax Reform form Acceleration and Inclusion or TRAIN law.
The BSP could raise the benchmark rate as early as March due to "rising inflation risks," Nomura said in a research note after the January inflation numbers were released last Tuesday.
President Rodrigo Duterte sought higher duties on some commodities to offset a reduction in personal income tax rates and help fund his P8-trillion infrastructure program.
His economic managers said impact of new taxes on inflation would be minimal and transitory as they warned businessmen against profiteering.