MANILA - The Bangko Sentral ng Pilipinas on Thursday kept the benchmark rate unchanged as inflation eases and as the economy continues to recover from the impact of the COVID-19 pandemic.

The overnight reverse repurchase facility, which banks use to price loans, has been pegged at the historic low of 2 percent since November 2020, with the overnight deposit and lending facilities also kept at 1.5 percent and 2.5 percent, respectively.

BSP Governor Benjamin Diokno earlier said the central bank is keen on keeping a balance between supporting recovery and managing inflation.

"The Monetary Board deems it prudent to maintain the BSP’s accommodative policy stance given a manageable inflation environment and emerging uncertainty surrounding domestic and global growth prospects," Diokno said.

Inflation eased to 3 percent in January 2022 using 2018 as the base year. It hovered above the 2 to 4 percent target range in 2021, with the full average reaching 4.5 percent using 2012 as base year, data showed.

Economic recovery continued to gain traction but the elevated global commodity prices, heightened political tensions and an uneven vaccination pace globally remain as risks, Diokno said during a virtual briefing.

"Looking ahead, given the stronger signs of recovery in output growth and labor market conditions and improvements in domestic financial markets, the BSP will continue to carefully develop its plans for the eventual normalization of its extraordinary liquidity measures when conditions warrant, in keeping with our price and financial stability mandates," he added.

BSP Gov. Benjamin Diokno says the Monetary Board decided to keep key interest rates unchanged at its first policy meeting for 2022. The PH benchmark interest rate has been at a record low of 2% since November 2020. pic.twitter.com/R1zqFmJtO7

— Warren de Guzman (@wddeguzman) February 17, 2022

BDO Unibank chief market strategist Jonas Ravelas said the BSP is likely to hike interest rates once by 25-basis points before December 2022 if inflation won't exceed 4.2 percent.

Two rate hikes could be implemented if inflation accelerated more than that, he added.

Ravelas said it would be critical to monitor several commodity prices that could affect inflation such as crude oil.

Fitch Solutions, meanwhile, earlier said it expected the BSP to raise interest rates by up to 75-basis points in 2022.

• BSP likely to keep interest unchanged in Feb: analyst

Several central banks globally have eased stimulus placed during the pandemic to address inflation. The US Federal Reserve is expected to implement 4 or 5 rate hikes this year, Ravelas said.

But the BSP is willing to wait for the right conditions before unwinding stimulus, according to Diokno.

• BSP says waiting for right conditions to unwind stimulus
• BSP maintains interest rate at 2 percent

The BSP's Department of Economic Research slightly raised its inflation outlook for 2022 to 3.7 percent from 3.4 percent and to 3.3 percent from 3.2 percent for 2023.

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