Philippine rates seen unchanged despite CPI spike

MANILA, Nov 5 - The Philippine central bank is likely to keep interest rates unchanged at a meeting on Thursday despite a spike in inflation to a five-month high in October, analysts said.

Central bank Governor Amando Tetangco said inflation at an annual 1.6 percent in October was in line with expectations following typhoons in the month which disrupted food supplies.

"The uptick was primarily due to supply pressures in agricultural products brought about by the recent typhoons," he told reporters in a mobile phone text message. "We expect this to be largely temporary, with the underlying near-term trend remaining manageable."

The October inflation number was the highest since 3.3 percent in May, and was at the upper end of the central bank's forecast range of 0.8 percent to 1.7 percent.

Earlier, Deputy Governor Diwa Guinigundo said the U.S. Federal Reserve's decision to keep interest rates unchanged had given the Philippine monetary authorities flexibility.

The Fed said it would keep borrowing costs near zero for "an extended period".

The Philippines' overnight borrowing rate has been kept at a record low of 4.0 percent since July and analysts say no change is likely until next year.

"The central bank may grow a little bit more hawkish but I wouldn't expect them to raise interest rates or tighten monetary policy until the second quarter of next year, the reason being the growth recovery is still nascent," said Edward Teather at UBS in Singapore.

The central bank's meeting later on Thursday will be monitored more for the language it uses than the rate decision, since that will almost definitely be unchanged.

"Their assessment on inflation outlook will be closely watched by the market," said Simon Wong at Standard Chartered Bank in Hong Kong.