The Philippines' central bank on Thursday left its key interest rate unchanged at a record low, citing manageable inflation amid upside risks to the outlook.
The Monetary Board of the Bangko Sentral ng Pilipinas held the overnight reverse repurchase facility at 3.0 percent, in line with economists' expectations.
The rates on the overnight lending and deposit facilities and the reserve requirement ratios were also left unchanged.
The latest decision is based on the Monetary Board's assessment of manageable inflation, the bank said in a statement.
Inflation continues to be projected within the target range of 3.0 percent ± 1 percentage point for 2017-2018, the bank said. Market expectations remain anchored to the inflation target over the policy horizon, the BSP added.
Policymakers attributed the elevated level of inflation largely to the recent increases in food prices and underlying inflation pressures.
The balance of risks surrounding the inflation outlook continues to be tilted toward the upside, given the transitory impact of the proposed tax reform program as well as possible further adjustments in transportation fares and electricity rates, the bank said.
Even amid external headwinds, the outlook for domestic economic activity remains intact owing to buoyant household consumption and private investment, increased government spending, ample liquidity, and sustained credit growth, the BSP noted.
The bank also said that it will remain vigilant against any risks to the inflation outlook and will adjust its policy settings as needed to ensure that future inflation remains consistent with the medium-term target while being supportive of sustainable economic growth.
Capital Economics economist Gareth Leather expects the policy rate to remain unchanged at 3.0 percent through 2017.
"With fuel and electricity inflation set to ease as the low base caused by last year's slump in oil prices drops out of the annual comparison, inflation should start to fall gradually over the coming months," the economist said.
"Equally, with the economy continuing to expand at a decent pace, there is no need for monetary policy to be eased either."
Earlier this week, the BSP announced that Deputy Governor Nestor Espenilla will be promoted to the helm of the bank in July, when the present chief Amando Tetangco steps down.
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