(Bloomberg) -- The Philippine central bank is set to maintain its benchmark interest rate at a 17-year high on Thursday, as weakness in the local currency and stubborn inflation keep policymakers from pivoting to easing yet.

All 26 economists in a Bloomberg survey expect the Bangko Sentral ng Pilipinas to leave the target rate steady at 6.5% for a fifth straight meeting. Finance Secretary Ralph Recto, who sits in the rate-setting board, was cited by the Philippine Daily Inquirer as saying that the BSP would likely keep borrowing costs unchanged this week and that easing may happen later this year.

An extended pause is likely after last week’s data showed inflation, although within the central bank’s 2%-4% goal, quickened for a third straight month on higher food costs. A recent bout of local currency weakness after economic output missed expectations last quarter limits the options for the central bank, for now.

The peso has fallen nearly 4% this year and is one of Asia’s worst performers this quarter, amid heightened territorial tensions between the Philippines and China and the prospect of US rates staying elevated for longer. Latest data showing US inflation cooled in April for the first time in six months may provide relief for currencies, including the peso, which recently dropped to near the key 58-per-dollar level.

Here are key things to watch at the briefing in Manila at 3 p.m.:

Inflation, Peso

The BSP expects price gains to hover above the target band in the coming months, although it remains confident that average inflation will stay within goal this year and the next. HSBC Holdings Plc anticipates the print to return to goal in August or September.

The peso has weakened more than 2% against the dollar this quarter. Currency moves matter for a country like the Philippines that imports almost all its fuel needs and is among the world’s biggest rice buyers.

As the peso was being battered about a month ago, BSP Governor Eli Remolona had then said that the currency’s slide wasn’t enough to derail monetary easing later this year or in early 2025. Analysts will pay close attention to his remarks Thursday.

Economic growth

“Solid growth amid a still sticky inflation backdrop provides room for BSP to remain focused on price pressures in the near-term,” said economists Lavanya Venkateswaran and Jonathan Ng from Oversea-Chinese Banking Corp. in Singapore.

Looking beyond the headline growth figures, the data showed signs of weakness in consumption, which makes up 70% of Philippine GDP. Investment growth also cooled.

“A sustained deceleration of inflation and disappointment on the growth front could convince the BSP to cut rates as soon as the Fed does later this year,” said senior economist Nicholas Mapa from ING Groep NV.

--With assistance from Tomoko Sato and Ditas Lopez.

(Updates with comment from finance secretary in the second paragraph.)

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