MANILA, Philippines - As expected, the Bangko Sentral ng Pilipinas (BSP) held its key interest rate steady in a regular policy meeting on Thursday.

It kept the overnight borrowing rate at a record low of 4% for the ninth meeting in a row.

All 12 economists polled by Reuters last week had expected no change. Six of the 12 predict a rise in the fourth quarter, and five in August. Only one expected rates to stay on hold until the early part of next year.

BSP governor Amando Tetangco said earlier this month there was no urgency to raise interest rates, with inflation expected to stay manageable.

In its latest policy meeting, the central bank cut anew its inflation forecast for 2010 to 4% from 4.7%, and for 2011 to 3% from 3.6%.

The central bank first revised downward the inflation forecasts in June.

The BSP began unwinding crisis-driven liquidity policies in January, raising by 50 basis points to 4% the rate for lending short-term money under a peso rediscounting window. This was followed by two cuts in the budget for the facility, bringing it back to the pre-crisis level of P20 billion.

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.

This year, the Philippine government expects the economy to grow 5% to 6% as it vowed to cut the budget deficit and spend more on infrastructure.

The government raised next year's growth target to 7% to 8%. - With Reuters