MANILA, Philippines -- (UPDATE) The orchestrated interest rate cuts by five of the world's most influential central banks to cope with the worst financial shakeout seen in 80 years have given the Bangko Sentral ng Pilipinas greater flexibility to similarly slash interest rates whenever needed in the future.

"The coordinated move taken together with improved inflation expectations gives us greater monetary policy space," BSP Governor Amando Tetangco Jr. said Thursday in a text message from Washington DC where he is attending the joint International-World Bank annual meetings.

But BSP Deputy Governor Diwa Guinigundo added the local central bank's steady stance of monetary policy was appropriate for now.

The central bank kept its key interest rate, the overnight borrowing rate, on hold at 6.0 percent during a crucial monetary policy setting on Monday, ending a cycle of monetary tightening that had jacked up the rates by a total of 100 basis points since June this year.

Given snowballing fears of a global recession, the US Federal Reserve on Tuesday trimmed its closely watched federal funds rate by half a percentage point to a four-year low of 1.5 percent. Central banks in England, China, Canada, Sweden and Switzerland and the European Central Bank also eased their key interest rates.

The coordinated action came on the heels of the IMF's latest assessment that a global recession -- defined as a slowdown in world output growth to 3.0 percent or less -- may be imminent next year. In its earlier report in July, the IMF had assigned only a 25 percent probability of such a major global downturn.

"We will continue to monitor the evolving situation to make sure our assessment is fresh and our policy stance appropriate," Tetangco said.

But despite a much-improved inflation outlook in the months ahead given softening food and fuel prices, the local central bank -- which fine tunes monetary policy every six weeks -- also cautioned against any sudden monetary easing.

"Easing pressures in an increasingly uncertain external environment are best addressed by keeping the rates steady," Guinigundo said. "We shall continue to monitor and prepare for any contingency."

Given the fast erosion of market confidence across G7 or the world's seven richest nations, the orchestrated move was very critical, Guinigundo said.

"Equally critical to me is a concrete demonstration in resolve to undertake painful financial sector reforms especially in the areas of supervision and financial market discipline," he said.

"Fortunately, as long as Filipinos continue to trust in our own resilience and economic fundamentals, the effects on us have been generally limited," he added.

Rizal Commercial Banking Corp. senior vice president Marcelo Ayes said the statements from the top central bank officials suggested that the BSP would bring down rates whenever it felt appropriate to do so.

"But they are balancing the growth outlook. The peso might weaken further if they cut rates too soon. Maybe they will wait for (the influx of) remittance flows," Ayes said.

With the projected major downturn in the global economy, Ayes said the softening of global oil prices could accelerate too.

On Tuesday, the National Statistics Office reported that the annual inflation rate in September had tapered to 11.9 percent from a 17-year peak of 12.5 percent in August, which the BSP said was a "turning point" towards declining inflation this year and next year.

Given this favorable development, the BSP was thus expected by some to reverse some of its previous monetary tightening to support domestic growth.

But Jonathan Ravelas, strategist at Banco de Oro Unibank Inc., said that because core inflation -- which strips volatile items like food and fuel from the consumer basket in measuring price increases -- even surged to 7.5 percent in September from 7.0 percent in August, the BSP may have to stay cautious.

"They won't cut yet unless there's a real need. But now the BSP has become braver because inflation has declined," Ravelas said. He added that the government's infrastructure spending, not a sudden monetary easing, should support domestic growth and help attain a respectable expansion of close to 5.0 percent next year.

In line with its assessment that the world was on the brink of a major global downturn, the IMF has projected that the Philippine domestic economy would grow by only 4.4 percent this year and further slow down to 3.8 percent next year even while the inflation rate was seen to ease to an average of 7.0 percent next year from 10.1 percent this year.

Ma. Theresa Quirino, treasurer at the state-owned Development Bank of the Philippines, agreed that the "neutral" BSP stance was appropriate for now.

"We are so fortunate that Philippine banks have so much liquidity," she said.

The financial crisis that first erupted with the US subprime mortgage collapse in August last year has deepened further in the past six months and entered a tumultuous new phase in September.