BSP keeps policy rate at record low

Reuters

Posted at Dec 29 2010 05:36 PM | Updated as of Dec 30 2010 01:36 AM

MANILA, Philippines - The central bank left its key policy rate unchanged at 4% following a policy review on Wednesday, a decision that had been widely expected by the markets.

The rate has been at a record low of 4% since July 2009, with the Philippines one of the few countries in Asia not to have raised rates since the global financial crisis.

The policy-making Monetary Board holds a rate-setting meeting every 6 weeks.

Earlier, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco said there was no compelling reason to raise interest rates, with inflation seen staying benign in the medium term.

The BSP expects annual inflation in December to come in between 2.5% to 3.4%, bringing the full-year average below the midpoint of the government's 3.5% to 5.5% target.

All 11 analysts in a Reuters poll expected the central bank to hold rates on Wednesday. Six of 10 economists expect a rate hike in the first half of 2011.

The central bank cut rates by a total of 200 basis points between December 2008 and July 2009 to soften the blow of the global recession.

The government expects the economy to have grown faster than its 2010 target of 5% to 6%, supported by a recovery in trade and remittances.