The Philippine central bank decided to keep its key interest rate at a record low for the sixth straight meeting on Thursday.
The Monetary Board of the Bangko Sentral Ng Pilipinas decided to hold the key interest rate, which is the overnight reverse repurchase facility rate, steady at 2.00 percent.
The interest rates on the overnight deposit and lending facilities were kept at 1.5 percent and 2.5 percent, respectively.
“The Monetary Board is of the view that the expected path of inflation and downside risks to domestic economic growth warrant keeping monetary policy settings unchanged,” the bank said.
The board said it remains keen on sustaining monetary policy support for as long as necessary in order for the momentum of economic recovery to gain more traction.
The bank forecast inflation to settle slightly above the upper end of the target band of 2-4 percent this year. However, inflation is forecast to ease towards the midpoint of the target range in 2022 and 2023.
With inflation likely to ease further and the economy in desperate need of more support, it is only a matter of time before the Bank is compelled to ease policy, Alex Holmes, an economist at Capital Economics, said.
The economist said the BSP will cut rates by a further 50 basis points in the second half of the year, with the first in September.
Official data released earlier this week showed that the economy rebounded 11.8 percent in the second quarter, the biggest expansion since the fourth quarter of 1988. However, GDP fell 1.3 percent sequentially.