MANILA (UPDATE) – The Bangko Sentral ng Pilipinas kept interest rates steady on Thursday in line with analysts' expectations.

BSP Governor Benjamin Diokno said the Monetary Board decided to maintain the interest rate on the BSP’s overnight reverse repurchase facility, which banks use to price their loans, at 2 percent.

"The interest rates on the overnight deposit and lending facilities were likewise kept at 1.5 percent and 2.5 percent, respectively," Diokno said.

The BSP said that while inflation is likely to remain high in the coming months, inflation would go back "within the target range of 2-4 percent over the policy horizon as supply-side influences subside."

Inflation quickened to 4.2 percent in January as prices of pork, chicken, vegetables and oil products continued to rise along with the cost of services.

January's inflation rate was higher than BSP's forecast range of 3.3 to 4.1 percent for the month, and 2 to 4 percent annual forecast for 2020 until 2022.

A Reuters poll of economists on Wednesday predicted the BSP would leave its key rate unchanged for a second straight meeting.

Last year, the central bank cut interest rates by a cumulative 200 basis points to help shore up the economy amid the disruptions of the COVID-19 pandemic.

BDO Capital president Ed Francisco earlier said rate cuts are not enough to revive the economy.

• BSP rate cuts not enough anymore to revive economy: analyst

The Philippine economy contracted 9.5 percent in 2020 -- the worst since World War 2 due to the disruptions of the pandemic.

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