BSP Keeps Overnight Rates Unchanged

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The Bangko Sentral ng Pilipinas kept overnight rates steady yesterday, as expected, saying it wants to monitor the impact of a tiered interest rate system before further policy moves.

The bank also said high liquidity in the economy made a "prudent pause" appropriate.

Analysts noted the move was expected, but added that a rate cut was likely in the near future.

"Going forward, we are expecting rate cuts," said Edward Lee, senior fixed income strategist at Standard Chartered Bank in Singapore.

"The central bank might cut rates by a total of 75 basis points in 2007. It will cut rates 25 basis points each quarter starting in the second quarter."

BSP Governor Amando Tetangco told Reuters in Tokyo on Monday that he wanted more time to see the impact of the tiering scheme -- a range of rate cuts on deposits above P5 billion ($102 million) -- before considering a reduction in headline rates.

In a Reuters poll before his comments, five of 10 analysts had expected the central bank to cut its headline interest rates by at least 25 basis points. …