Nov. 6--THE Bangko Sentral ng Pilipinas (BSP) on Thursday decided to keep its key policy rates steady, confident that the typhoon-induced calamities would have a limited impact on food prices. In a press briefing, BSP Governor Amando Tetangco Jr. said the Monetary Board maintained its overnight borrowing or reverse repurchase (RRP) rate at 4 percent and the overnight lending or repurchase (RP) rate at 6 percent.

The interest rates on term RRPs, RPs, and special deposit accounts (SDA) were also left unchanged.

"The Monetary Board considers the current settings as appropriate. The latest inflation forecast reflected a slightly higher path, but remained closer to the lower bound of the target over the policy horizon," Tetangco said.

He said the demand side pressures on consumer prices continue to be limited and that the inflation expectations are well anchored.

On the supply side, price pressures from crop losses because of the recent typhoons are however expected to have a long lasting impact on inflation, the BSP chief said.

He said non-monetary measures would however address supply-side risks to consumer prices.

These include timely importation of meat and rice, as well as price monitoring efforts of the Department of Trade and Industry and enforcement of the Price Tag Law.

Tetangco said keeping the policy rates steady would help support domestic demand, including reconstruction efforts of the government and economic activity in the near term. "These will affect the supply condition and price movements," he said.

Citing its latest inflation outlook, Deputy Governor Diwa Guinigundo said the BSP increased its forecast to 3.28 percent for this year from the earlier 3 percent.

On Thursday, the National Statistics Office said inflation rose to 1.6 percent in October from 0.7 percent in September because of the impact of recent typhoons on food prices. To date, inflation averaged 3.2 percent, which is within the BSP's target range of 2.5 percent to 4.5 percent for this year.

For next year, the BSP expects inflation to reach 4.02 percent, higher than the earlier forecast of 3.4 percent, but within the target range of 3.5 percent to 5.5 percent, Guinigundo said.

The increase in the inflation forecast next year was due to likely faster economic growth, the onset of the El Nino dry weather phenomenon late this year, and upside risks arising from the petition for higher utility rates.

For 2011, the BSP projected inflation to reach 3.4 percent.