MANILA, Philippines - The central bank, Bangko Sentral ng Pilipinas (BSP), kept its benchmark borrowing rate steady, but raised a bank lending rate in a regular policy meeting on Thursday.

The overnight borrowing rate stayed at a record low of 4%, as expected, but the rate for lending short-term money to banks under a rediscounting facility was increased to 4% from 3.5%.

BSP governor Amando Tetangco signaled on January 7 that the bank would unwind some of its easy monetary policy as the economy recovers and inflation picks up.

All 12 economists in a Reuters poll this week had forecast the central bank would leave the key overnight borrowing rate unchanged. A majority forecast the first rate hike will come in the second quarter.

The central bank said on Wednesday annual inflation in January was likely to accelerate to 4.5% to 5.4% from 4.4% in December on higher food, utility and fuel prices. The higher end of the forecast would be the fastest rate since March when it was at 6.4%.

The central bank slashed rates by a total of 200 basis points between December 2008 and July 2009 to soften the blow of the global recession on the local economy. - Reuters