Confronted by the prospect of exceeding inflation targets this year, the Philippines' central monetary authority, the Bangko Sentral ng Pilipinas, Thursday raised its key policy rates by a quarter of a percentage point.

The move adjusted the central bank's interest rate on overnight lending to 6.5 percent and on borrowing to 4.5 percent, levels last seen in mid-2009.

A faster inflation rate of 4.5 percent in April reported earlier in the day by the National Statistics Office precipitated the interest rate increase, which came just 43 days after the central bank raised rates also by a similar amount.

The April inflation figure came close to the upper end of a range of between 3.7 percent and 4.7 percent that the Bangko Sentral had projected for the month, signifying the level of "supply-side pressures" from high global oil prices.

Had the BSP not made the rate increase, inflation for the full year could exceed the target of 3-5 percent.

"The latest baseline inflation forecasts continue to suggest that the 3-5 percent inflation target for 2011 remains at risk," Bangko Sentral governor Amando Tetangco Jr. said in a news conference after the Monetary Board meeting that approved the rate increase.

Mr Tetangco pointed out that international oil prices have remained elevated due to strong global demand as well as concerns about supply gaps. He also said that global non-oil markets-apparently referring to food products-also continued to tighten.

The Monetary Board meeting also looked at the possible impact of sustained price pressures and higher inflationary expectations on future wage and price outcomes.

"With these considerations, the Monetary Board deemed it prudent to rein in inflation expectations further and contain second-round effects with a follow-through policy action," Mr Tetangco said.