Philippine monetary officials decided Thursday to reduce key policy interest rates anew by 25 basis points on expectations that inflation level will remain within target.

The Monetary Board cut overnight borrowing rates or reverse repurchase facility (RRP) to 4 percent while overnight lending or repurchase facility (RP) to 6 percent. The interest rates on terms RRPs, RPs and special deposit accounts were also reduced accordingly.

This is the second time this year that the policy-making Monetary Board decided to cut key rates. The board cut the key rates by 25 points on Jan. 19 last year.

"Latest baseline forecasts have continued to indicate that inflation is likely to settle within the lower half of the 3 to 5 percent target range in 2012 and 2013. The risks to the inflation outlook also appear to be broadly balanced," Central Bank Governor Amando M. Tetangco told a press briefing.

Tetangco said benign inflation outlook gives further scope for a slight reduction in policy rates to boost economic growth.

According to him, volatile oil prices due to geopolitical tensions in the Middle East and strong capital inflows lend an upside risk to inflation. Domestic demand grows at a modest pace on back of weaker external demand.

He added the central bank will continue to monitor emerging demand and price developments to ensure that monetary policy settings remain consistent with price stability while being supportive of non-inflationary economic growth.