(Bloomberg) -- The Philippines left its benchmark interest rate at a record low, conserving its firepower as higher government spending strengthens the growth outlook.
Bangko Sentral ng Pilipinas kept the overnight borrowing rate at 3 percent, it said in Manila on Thursday, as predicted by all 16 economists surveyed by Bloomberg. The bank announced in May a policy overhaul, including lowering the benchmark and narrowing the band around it.
President Rodrigo Duterte, who took office on June, is increasing spending on infrastructure and social programs to bolster growth to as much as 7 percent this year and 7.5 percent in 2017. Asian policy makers are balancing the need for stimulus against risk including higher U.S. interest rates that could heighten financial market volatility.
“The Philippines remains an outlier, particularly on the growth front, which is led by domestic demand,” Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore, said before the decision. “Monetary policy is likely to remain on hold for the year. Growth is likely to remain strong and inflation, despite on the downside now, will move toward the bank's target.”
For a quick explainer on the Philippines' economic path, click here.
Consumer price-gains are expected to accelerate near the mid-point of the central bank's 2 to 4 percent target in 2017, after projected to average slightly below goal this year. The economy expanded 7 percent last quarter, the fastest in Asia after India.
--With assistance from Clarissa Batino Michael J. Munoz and Cecilia Yap To contact the reporters on this story: Siegfrid Alegado in Manila at aalegado1@bloomberg.net, Ditas Lopez in Manila at dlopez55@bloomberg.net. To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karl Lester M. Yap
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