The Bangko Sentral ng Pilipinas (BSP) said Thursday the extension of the US Federal Reserve's debt-buying program by another month would be positive for bond markets and should give central banks in the region more leeway in setting monetary policy.

''The extension to October of the treasury purchase completion reflects inflation remain less of a concern in the US and should therefore support the long end of the US Treasury curve...the long end of the Philippine domestic yield curve would likely reflect this also and may result in stable to flatter curve,'' BSP Governor Amando Tetangco said in a mobile phone text message to Reuters.

''To the extent that inflation expectations are kept at bay, the extension of the completion date of purchases to October should result in flexibility for other jurisdictions, including emerging markets, in the implementation of their own exit strategies.''

The Fed launched the debt-buying program in March when it had already cut interest rates to zero but wanted to open the money taps even wider to support the struggling economy.

Treasury purchases were scheduled to expire in September.

The US central bank also said on Wednesday the US economy was showing signs of leveling out two years after the onset of the deepest financial crisis in decades.

Tetangco said that any sign of economic stabilization in the United States boded well for the Philippines but noted that such signs remained tentative.

''Signs of stabilization in the US growth should support our own growth prospects. Nevertheless, as these signs remain tentative, we would need to continue to be watchful of developments both here and abroad,'' Tetangco said ''We will therefore make adjustments to our stance as the inflation outlook would permit.''

Tetangco has said previously that Philippine policymakers were mulling an exit from the current easing cycle if there were signs the country would recover early from the global downturn.

He said on Wednesday he did not see the need to inject more cash in the financial system by cutting banks' reserve requirements, adding the current level of liquidity was enough to meet the needs of the economy.

The central bank is widely expected to keep rates steady at its Aug. 20 policy review after it cut benchmark rates by a total 2 percentage points since December to a record low of 4 percent. (Reuters)