The Bangko Sentral will continue to lower borrowing costs and free up cash for lending as the global recession threatens to slow growth in the Southeast Asian economy, Gov. Amando Tetangco said.

“We need to sustain an accommodative monetary policy stance to help ensure that there is adequate credit in the system which should reinforce market confidence,” Tetangco said in a Bloomberg Television interview yesterday. “As the global financial strains are still likely to persist and pose risk to economic activity, we need to provide support.”

Bangko Sentral on Thursday cut its overnight borrowing rate by a quarter-point to 4.75 percent, the lowest since May 1992, to prop up an economy forecast by the government to grow in 2009 at the slowest pace in eight years. Concern that a weaker peso and rising utility costs may fan inflation prevented a bigger reduction, Tetangco said Thursday.

“The central bank can afford not to be too aggressive because the situation doesn’t call for it,” said Yvette Marquez, a trader who helps manage about $7 billion of assets at BPI Asset Management. “What they’re trying to say is that we will still cut but it won’t be immediate. And they also have to protect the peso.”

The peso has fallen 2.4 percent this year against the dollar. In 2008, the currency’s 13 percent drop was the biggest in eight years.

The local currency closed at 48.50 against the greenback, up from 48.64.

Inflation, which unexpectedly accelerated for the first time in six months to 7.3 percent in February, continues to be within the central bank’s targets for this year and next, giving the central bank “some space,” Tetangco said.

“What we would want to make sure is that credit conditions continue to support economic growth without putting inflation targets at risk,” Tetangco said.

The central bank may use other monetary tools to boost cash in the financial markets and spur lending, central bank Deputy Gov. Diwa Guinigundo said, reiterating comments he made Thursday.

“We still have flexibility in monetary policy whether by interest-rate cuts, or through the reserve requirement or the rediscount budget,” Guinigundo said in a telephone interview.

Bangko Sentral has raised the amount it can lend to banks in exchange for securities, or the so-called rediscount budget, twice in four months, with the latest adjustment taking effect in March. In November, it reduced the amount of money it requires banks to set aside as reserves.

“If you consider everything else we’ve done, we’ve eased more” than just 125 basis points, Guinigundo said. The central bank has cut the overnight rate to 4.75 percent from 5.5 percent in mid-December. Bloomberg