MANILA, Philippines - As expected, the Bangko Sentral ng Pilipinas (BSP) has decided to keep its interest rates steady, saying that the inflation outlook remained favorable.

The BSP kept its overnight borrowing and lending rates at record lows of 4% and 6%, respectively. These rates have been on hold since August this year.

The move was widely expected, with all 10 economists in a Reuters poll last week saying that the BSP would leave the overnight borrowing rate unchanged at 4%. A slim majority had projected the first rate hike to come in the third quarter of the year.

The central bank has 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.

The rate cuts were meant to encourage banks to lower their lending rates to help spur consumption and business investments. With a report from Reuters