Philippine keeps rates unchanged

MANILA, June 18 (Reuters): The Philippine central bank will likely keep rates unchanged at its policy meeting on Thursday after growth unexpectedly slowed in the first quarter, a Reuters poll showed, but quickening inflation may lead to a rate increase as early as next month.
Central bank Governor Amando Tetangco said on Wednesday that inflation for this year and next would likely average above previous forecasts due to price pressures coming from costlier power, food and transport costs.
"We would like to see the extent of brewing pressures that we have seen lately on inflation and assess the potential second round effects that can come out from these pressures," Tetangco told reporters ahead of a policy review on Thursday.
"Given the pressures, I would think that there will be an upward adjustment in the inflation forecasts," Tetangco said.
At its last policy meeting in May, the central bank forecast average inflation at 4.3 per cent this year and 3.4 per cent for 2015. Both remain within the central bank's current target ranges.
Tetangco said the Monetary Board would also review the impact of a total two-percentage-point increase in banks' reserve requirements, the Federal Reserve's taper of its bond-buying programme, slowing Chinese economy and geopolitical developments in Iraq on domestic inflation and financial markets.
Nine of 12 analysts surveyed by the news agency expected the central bank to keep the benchmark rate at a record low of 3.5 per cent. Three said it would raise the policy rate, which would be the first hike in three years.
The Bangko Sentral ng Pilipinas (BSP) is also widely expected to keep the special deposit account rate at 2.0 per cent and leave the reserve requirement ratio (RRR) unchanged at 20 per cent after raising it by a total of two percentage points in each of the last two meetings.