"Looking at what is happening globally, there is a general tightening of monetary policy," he told reporters in a briefing in New York.

The Philippines would need to be vigilant about "a possible portfolio shift if dollar assets become more attractive than peso assets...which means we cannot really rule out a rate hike for the remainder of the year."

Philippine overnight rates stand at 7.5 percent for borrowing and 9.75 percent for lending, the highest level in more than four years.

"If the US continues (rate increases) and the ECB (European Central Bank) raises and Japan (goes up), we will have to see," he added. "We will also have to look at the inflation outlook."

Philippine annual inflation in March stood at 7.6 percent, unchanged from the preceding month.

Analysts have expressed fears the country may see inflation spike if crude prices surge during the peak northern hemisphere summer consumption period.

The May crude contract on the New York Mercantile Exchange climbed .36 on Tuesday to end at .80 per barrel due to worries over supply disruptions over Iran’s nuclear ambitions and unrest in Nigeria.

Oil dealers said the price may soon spike to over due to strong consumption from industrial powers like the US and China.

"The Central Bank is not going to let inflation get out of hand (in the Philippines)," said Tetangco.

He added that the strength of the Philippine peso, Asia’s best performing currency last year, and burgeoning foreign reserves should help cushion the impact of another crude oil spike.

In Manila, BSP Deputy Governor Diwa Guinigundo said in a recent interview with Dow Jones Newswires that the authority looks to other factors on policy, including the direction of U.S interest rates, whether inflationary pressures are driven by supply or demand, and wage pressures.

"Setting interest rates is not just about one thing. You don’t say, the peso is strong. So, in a sense, imported inflation can be managed. That’s just one part of the story," said Guinigundo.

Monetary authorities had expected inflation to rise in the first half after a crucial increase in the value-added tax rate to 12 percent in February from 10 percent, before easing in the second half of the year. The VAT rate hike is part of a package of fiscal reforms meant to balance the budget as early as 2008. While the move improved the government’s fiscal position, it could also lead to higher consumer prices.

"I think the developments are more favorable than we had expected," said Guinigundo, noting that the increase in prices wasn’t as sharp as the authorities had expected.

Various mitigating measures, including a campaign against hoarders and profiteers and relatively cheap China imports, softened the blow on inflation, he said.

Consumer prices averaged 7.3 percent for the first three months after March year-on-year inflation came in steady at 7.6 percent. For the year, the government is expecting inflation to average 7.3 percent to 7.9 percent, versus 2005’s 7.6 percent.

Meanwhile, the peso, one of Asia’s best currency performers with a 6 percent gain in 2005, continued to rise this year, touching at one point a new three-and-a-half-year high.

Nevertheless, Guinigundo maintained that "it’s difficult to say that" the central bank’s bias for monetary tightening may have ended, as market participants widely anticipate following the improved inflation outlook and the peso’s strong showing this year.

To fight inflation last year, the central bank tightened policy considerably, raising the overnight rates three times by a total of 75 basis points and bringing its overnight borrowing rate to 7.5 percent, and also increased reserve requirements by banks in July. It last increased the overnight rates in October.

Economists believe the Philippine central bank may have shifted to a neutral policy bias, with some predicting that a rate cut is possible later in the year given the recent easing in inflation.