At its regular monthly meeting Thursday, the Monetary Board, the policy-making body of the central bank, maintained its overnight rates for the 15th straight month at 7.50 percent for overnight borrowing and 9.75 percent for overnight lending and kept the tiering system that was revived since November.

Tiering, effectively a monetary easing, is a system wherein the BSP pays a lower rate on overnight funds in excess of certain threshold levels to encourage banks to lend out instead of parking all their funds with the monetary authority.

Since the central bank, Bangko Sentral ng Pilipinas (BSP), introduced the tiering system, some analysts said monetary policy had become too accommodating given possible price pressures from rising liquidity caused by heavy foreign exchange inflows from foreign portfolio investments and remittances from overseas Filipino workers.

But BSP sources said a package of measures to liberalize the capital accounts, focusing on the outflow side, was being prepared and would soon be presented for approval by the Monetary Board.

"We will be responding to capital flows in due time," one BSP source said. "We have to do something about the expected heavy inflows."

The source declined to say what measures were being drawn up, but other officials said the package would include the proposed changes to the overbought position or the amount of dollars that banks are allowed to buy from the spot foreign exchange market.

In a commentary dated Jan. 23, economists from Credit Suisse said monetary policy in the Philippines would "likely remain burdened by the challenge of managing capital inflows, which may prompt the authorities to relieve the pressure by liberalizing capital outflows."

Three possible measures expected by Credit Suisse to be adopted by the BSP as part of this liberalization were:

Simplifying documentary requirements for buying foreign exchange for current account transactions (only transactions worth $5,000 and below are exempted from the tedious requirements).

Raising banks' overbought foreign exchange limit, currently at the lower of 2.5 percent of unimpaired capital or $5 million whichever is lower.

Increasing the ceiling on resident purchases of foreign exchange for investment abroad, currently at only $6 million.

"However, it is uncertain how rapidly these would work to stop the peso appreciation and stabilize money market rates," Credit Suisse said. It added that the BSP appeared to be focusing on the exchange rate rather than short-term interest rates as its operating target.

BSP Deputy Governor Nestor Espenilla Jr. said the BSP rates were maintained because these were "sufficient grounds for caution," given the uncertainty in oil prices and the risk to food prices posed by the El Niño dry spell.