The Philippines' inflation accelerated in March at an expected pace, supporting the view that monetary authorities are likely to leave current interest rates unchanged for a while longer to allow the economy to continue its growth.

The consumer price index – the country's main barometer for inflation – rose at an annual pace of 4.4% and was up 0.2% from February, the National Statistics Office said Tuesday. Inflation in February was 4.2% from a year earlier and 0.4% from a month before, and 6.4% in March 2009.

"This suggest the current monetary policy settings remain appropriate," Bangko Sentral ng Pilipinas Governor Amando Tetangco told reporters in a text message. "We will nevertheless continue to closely monitor demand conditions to see if there is a need to make adjustments in our policy stance."

Inflation is broadly expected to remain stable in the first half of the year even as the country faces rising food prices as an El Niño induced drought pares farm output and due to expenses from the forthcoming general elections, economists said. That will allow the central bank to retain its accommodative policy given the weakest expansion in over a decade last year amid the global downturn.

"With headline inflation continuing to surprise to the downside, we believe that policy bias will remain toward growth," Barclays Capital said in a research note. Barclays Capital projected March headline inflation at 4.7%.

The first policy meeting of the central bank in the third quarter is scheduled on June 3, right after the May 10 elections and the earliest date that economists expect the central bank will tinker interest rates.

The first interest rate hike of 25 basis points is expected within the third quarter with policy rates at 4.5% by the end of the year, Barclays Capital said.

The March inflation data continue "to support within-target full year average inflation rates for 2010 and 2011," Tetangco said. The central bank targets are averages within 3.5%-5.5% for 2010 and 3.0%-5.0% for next year.

The central bank's next policy meeting is on April 22, and most economists predict monetary authorities will keep interest rates unchanged at that meeting.