Nov. 5 (Bloomberg) -- The Philippine central bank will probably keep borrowing costs at a record low to boost growth after tropical storms damaged crops and infrastructure, threatening the Southeast Asian nation’s economic recovery.

Bangko Sentral ng Pilipinas will keep its benchmark interest rate unchanged at 4 percent for a third straight meeting today, according to all 14 economists surveyed by Bloomberg News. That’s the lowest level since central bank data started in 1990. The decision is due about 4 p.m. in Manila.

Tropical storms in the past month destroyed about 38 billion pesos ($800 million) of crops, roads and bridges, the government estimates. The Philippines’ $167 billion economy will likely expand at the lower end of the government’s 0.8 percent- to-1.8 percent target this year, Economic Planning Secretary Augusto Santos said Oct. 23.

“The calamities had such an impact and by keeping interest rates low, it will help support growth,” said Luz Lorenzo, an economist at ATR-Kim Eng Securities Inc. in Manila. Policy makers are “very mild and sanguine about inflationary prospects.”

Easing inflation allowed the Philippine central bank to slash its key interest rate by 2 percentage points from December to July to bolster growth as exports collapsed. Consumer prices rose 1.6 percent in October, the fastest pace in five months, the statistics office reported today.

‘Supply Pressures’

“As expected, the uptick was primarily due to supply pressures in agricultural products brought about by the recent typhoons,” central bank Governor Amando Tetangco said today. “We expect this to be largely temporary, with the underlying near-term trend remaining manageable,” he said in a mobile phone message.

The Philippine peso, near a six-week low, has declined 0.2 percent this year against the dollar, the worst performance among Asia’s 10 most-traded currencies excluding Japan’s, according to Bloomberg data. The peso was little changed at 47.55 per dollar as of 9:35 a.m. in Manila while five-year bond yields rose.

The prospect that the central bank will keep interest rates low to support growth is keeping the peso “weak,” according to Marcelo Ayes, senior vice president at Rizal Commercial Banking Corp. in Manila.

Typhoon Repairs

Philippine Long Distance Telephone Co., the nation’s largest company by market value, cut its 2009 revenue target this week, saying customers may limit purchases of mobile-phone credits and internet use to pay for typhoon repairs and furniture replacements.

President Gloria Arroyo, whose term ends next year, has boosted spending to shield the economy from the worst global recession since the 1930s. Her government expects to post the biggest budget deficit this year since at least 1985, when Bloomberg data began.

The Philippine economy expanded 1.5 percent in the second quarter from a year earlier, quickening from a decade-low 0.6 percent in the previous three months.

Asian economies may need to “maintain policy support for some time” to sustain their recovery, the International Monetary Fund said last week. Malaysia and India refrained from following Australia in raising interest rates last month, even as the Reserve Bank of India ordered banks to keep more cash in government bonds to begin exiting its record monetary stimulus.

Policy ‘Flexibility’

The Reserve Bank of Australia this week raised its benchmark interest rate for the second straight month, becoming the only nation to increase borrowing costs twice this year as the global economy recovers. Indonesia kept its key rate unchanged yesterday.

Bangko Sentral has “the flexibility to maintain the rates,” Tetangco said last week. The Philippine economy “can still make use of monetary accommodation,” Deputy Governor Diwa Guinigundo said Oct. 30.

“The inflation outlook continues to be favorable so why start tightening?” Guinigundo said last week. Bangko Sentral also isn’t currently considering changes in bank reserve requirements and its so-called rediscount budget, or the amount of funds available for lenders to borrow from the central bank, he said.

Inflation, along with the impact of recent storms as well as developments in major economies “will be important factors” in today’s policy meeting, Tetangco said.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

Last Updated: November 4, 2009 20:59 EST