MANILA, Philippines -- The country’s central bank, the Bangko Sentral ng Pilipinas, surprised markets on Friday by cutting bank reserve requirements by 2 percentage points, injecting more liquidity into the banking system to guard against the global financial crisis.

The cut in the regular or statutory reserve requirement, which takes effect from Nov. 14, may allow the central bank to keep its key overnight interest rates on hold at its policy meeting this month, some analysts said.

"It is pretty much expected," said Su Sian Lim at DBS Bank in Singapore. "They have been indicating that they'd rather go down this path first than cut interest rates."

The move takes the regular reserve requirements to 8.0 percent from 10.0 percent. Liquidity reserve requirements remain at 11.0 percent.

About P60 billion ($1.23 billion) are expected to be released into the financial system with the reserve cut, analysts said.

The central bank also increased its budget for the peso rediscounting facility to P40 billion from P20 billion, allowing more banks to obtain fresh cash from the central bank using promissory notes or other eligible debt for short-term liquidity needs.

"The two measures are aimed at pre-emptively ensuring the proper functioning of the interbank market and guarding against a possible liquidity or credit tightness arising from the global rise in risk aversion," the central bank said.

The central bank has been saying for some weeks that it is studying the possibility of reserve requirement cuts to boost liquidity.

The move follows a fall in inflation to an annual 11.2 percent in October from 12.5 percent in August and 11.8 percent in September.

But some analysts believe a cut in key interest rates is still in the offing with inflation on a steady decelerating path. The central bank kept rates steady at its last meeting in October but raised rates at each of its three previous meetings by a total of 100 basis points.

"I think it is a clear indication that a rate cut is in the pipeline," said Vishnu Varathan, economist at Forecast in Singapore. "There is of course a certain fear that increased liquidity could impact asset markets negatively over the medium term."