(RTTNews) - Thursday, in a widely expected move, the Philippine central bank raised its interest rates by 25 basis points in bid to contain rising inflation.

At its meeting, the Bangko Sentral ng Pilipinas Monetary Board increased its overnight borrowing or reverse repurchase rate to 6% and the overnight lending or repurchase rate to 8%. The central bank is raising its rates for the third month in a row.

In a statement accompanying the policy announcement, the central bank said, “The Monetary Board recognized that further measured tightening of monetary policy was necessary given the latest forecasts indicating above-target inflation for both 2008 and 2009.”

Further, the central bank noted that appropriate tightening of the monetary policy is needed to stabilize inflation to within the target range over the policy horizon and to contain inflation expectations. According to the assessment of the rate-setting committee, fluctuations in international oil prices continue to pose a major risk to the Philippines’ inflation outlook. At the same time, the central bank expects the recent easing in global food and oil prices to help to moderate inflation pressures.

In July, Philippines’ inflation had risen to 12.2% and the central bank had hiked its inflation forecast for 2008 to a range of 9%-11% from an earlier projection of 7%-9%.

Moreover, the central bank added that the Monetary Board will continue to keep a watchful eye on the balance of risks to the apex bank’s price stability objective with a view to implementing appropriate policy actions.

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