The Philippine central bank raised its interest rate for the first time since September 2014 in a bid to dampen inflationary pressures.
The Bangko Sentral ng Pilipinas raised the rate on its overnight reverse repurchase facility by 25 basis points to 3.25%.
Annual headline inflation accelerated to 4.5% in April, data from the statistics office showed, as prices rose in response to the government's tax reforms.
The central bank said inflation may breach the target range of 2% to 4% for 2018 due to supply-side factors. Inflation is estimated to revert to the range in 2019, with price pressures from transport fares, utility rates and wages remaining as upside risks to the outlook.
The central bank also signaled its readiness to take further actions to ensure price and financial stability.