LONDON-headquartered Hongkong Shanghai Banking Corp. (HSBC) statement said that the Bangko Sentral ng Pilipinas (BSP) is firm on keeping the policy rates steady for the rest of the year.

HSBC economist Trinh D. Nguyen said that they still see Philippine inflation staying at the low-end of the BSP’s full-year target range of 3 percent to 5 percent.

The economist believes that the central bank has room to sit back and watch how price and external conditions will behave. This is at the midst of the rising inflation pressures and some expectations that the Philippine gross domestic product growth or GDP would not be easing or getting better this year, respectively.

May’s inflation rate drop to 2.9 percent from April’s 3 percent. But Nguyen noted that this is not expected to last much longer.

She said that ample liquidity as well as steady domestic demand will keep inflation risks “tilted to the upside.”

“The external environment looks increasingly challenging, but growth prospects in the Philippines have brightened. With trade performing much better than expected and GDP growth for the year likely exceeding four percent, we believe the BSP will prudently sit still to monitor price and external conditions at the next meeting on Thursday. We expect rates to stay steady for the rest of the year,” Nguyen further stressed.

On Thursday, the policy making Monetary Board decided to maintain the BSP’s key policy rates at 4 percent for the overnight borrowing or reverse repurchase (RRP) facility and 6 percent for the overnight lending or repurchase (RP) facility. The interest rates on term RRPs, RPs and special deposit accounts were also maintained accordingly. The reserve requirement ratios were kept steady as well.