MANILA (UPDATE) - The Bangko Sentral ng Pilipinas on Thursday kept the country's overnight reverse repurchase rate at a record low of 2 percent to support economic recovery.

The BSP has kept interest rates at historic lows for a year now, after a surprise 25 basis point cut in November last year.

BSP Gov. Benjamin Diokno earlier said that "the harm from early monetary tightening exceeds the harm of moving too late, given the nascent state of economic recovery."

Despite inflation hovering above the upper band of the government's 2 to 4 percent target range, it is still "transitory" and is expected to settle back at the mid-level of target by next year, the central bank has said.

For 2021, inflation could settle at 4.3 percent, revised downward from 4.4 percent.

Inflation could be at 3.3 percent in 2022 and 3.2 percent in 2023.

Inflation eased to 4.6 percent in October, its lowest in 3 months despite the spike in fuel prices.

"On balance, the sum of new data suggests that there remains scope to hold monetary policy settings steady amid a manageable inflation environment," Diokno said.

"The Monetary Board maintains that keeping a patient hand on the BSP’s policy levers, along with appropriate fiscal and health interventions, will keep the economic recovery more sustainable over the next few quarters," he added.

• BSP says 5 to 6 pct economic growth target for 2021 'attainable'
• Inflation slows down to 4.6 percent in October

With the projected downtrend in inflation, Diokno earlier said the new government growth target of 5 to 6 percent for the year is attainable.

The economy could revert back to its pre-pandemic level next year, economic managers have said.

• BSP says 5 to 6 pct economic growth target for 2021 'attainable'
• Philippine economy likely to return to pre-pandemic level by 2022: NEDA

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-- with a report from Warren De Guzman, ABS-CBN News