MANILA (UPDATE)-- The Bangko Sentral ng Pilipinas (BSP) on Thursday kept its benchmark target reverse repurchase rate (RRP) steady as inflation eased in October.

BSP Deputy Governor Francisco Dakila said the RRP, which banks use to price loans, is still at 6.5 percent.

The BSP made an off-cycle 25 basis points rate hike in late October in a bid to tame inflation, which quickened in August and September.

• BSP makes off-cycle 25 bps rate hike, sees inflation above target this year

Inflation however eased in October to 4.9 percent, slower than the 6.1 percent recorded in September.

"The latest projections indicate that the inflation outlook has moderated over the policy horizon," Dakila said.

The BSP noted that risk-adjusted inflation forecasts remain above the target for 2024 at 4.4 percent, but were lower than the 4.7 percent outlook in its previous meeting in October.

For 2025 the forecast was at 3.4 percent, down from 3.5 percent in the earlier forecast.

Despite these slower inflation forecasts, the BSP said several factors could still speed up inflation.

"Nevertheless, the balance of risks to the inflation outlook still leans significantly toward the upside, notwithstanding the recent improvement in food supply conditions," the BSP said.

The central bank said these factors are "the potential impact of higher transport charges, electricity rates, and international oil prices, as well as of higher-than-expected minimum wage adjustments in areas outside the National Capital Region."

Asked how confident the BSP is that the country has reached the peak of rice-driven food inflation, Dakila said rice inflation may be lower because it is harvesting season.

"Also, if you look at the food in general, and look at imported food and look at the projections coming from international agencies such as the World Bank and IMF, the outlook is that there will be in general, a reduction in food prices globally," he added.

Factors that may slow down inflation include a weaker-than-expected global recovery as well as government measures to mitigate the effects of El Niño weather.

"The strengthening of the peso was also a factor in the lower inflation path that we’ve announced at this meeting," said BSP officer-in-charge Dennis Lapid.

The BSP said it is likely to keep interest rates high.

"Looking ahead, the Monetary Board continues to deem it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes fully evident and inflation expectations are firmly anchored," the BSP said.

The central bank said it may also hike rates if inflation speeds up again.

"Guided by incoming data, the BSP remains prepared to resume monetary policy tightening as necessary to steer inflation towards a target-consistent path, in line with its price stability mandate."

- With a report from Lady Vicencio, ABS-CBN News

• Inflation eases to 4.9 percent in October