Philippines holds interest rate as El Nino boosts inflation risk

MANILA (BLOOMBERG) - The Philippines left its benchmark interest rate unchanged for a sixth straight meeting as a dry spell brought on by El Nino adds to inflation risks.

Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at 4 per cent, it said in Manila on Thursday, as predicted by all 15 economists surveyed by Bloomberg. Policy makers also held the rate on so-called special deposit accounts at 2.5 per cent, as forecast by all seven analysts.

The Philippines has refrained from joining more than 30 central banks that have provided monetary stimulus this year. Economic growth is robust and the central bank remains vigilant against price pressure, Deputy Governor Diwa Guinigundo said this month. The weather bureau has said more than half the nation's provinces are affected by the dry spell.

"Upside risks to inflation are present due to El Nino, while growth is favorable and will pick up in the coming quarters," Euben Paracuelles, a senior economist in Singapore at Nomura Holdings Inc., said before the report. "I don't think the central bank will move in the foreseeable future."