MANILA, Philippines -- The Bangko Sentral ng Pilipinas, the country?s central bank, said Friday the Philippines, while currently hounded by slowing growth and rising inflation, would spring back to a "normal" business cycle early next year.

As the country's June annual inflation rate broke into a 14-year high of 11.4 percent due to surging fuel and food prices, BSP Governor Amando Tetangco Jr. said the global trend of monetary tightening would ease demand-driven consumer price pressures.

"We share the view that current oil and food prices are hardly sustainable, producing global slowdown and widespread inflation in all countries. Demand pressures will moderate as monetary policy is generally tightened," Tetangco said after the June inflation report was released by the National Statistics Office.

Like other central banks, the BSP tends to tighten monetary policy-whether through an increase in benchmark interest rates, a hike in the reserve requirement on banks or an expansion in the high-yielding special deposit accounts-to prevent an inflation-aggravating situation when there is too much money chasing too few goods.

Tetangco has repeatedly signaled the BSP's readiness to further tighten monetary policy if needed to counter rising inflation.

"For the Philippines, we should be back to normal cycle by early next year," the BSP chief said.

"This trend (of high inflation) is expected to peak during this third quarter and to start coming down in the fourth quarter through 2009," he added.

He noted that the country's inflation rate, as expected, had risen to double-digit levels on account of unprecedented jump in world oil prices. Oil based on US futures for the benchmark light, sweet crude was now trading at record-highs of about $144 per barrel.

"As a result, domestic pump price increases triggered large price build-up across wide commodities and services groups," Tetangco said.

The Philippines is a net importer of crude oil and is also the world's largest importer of rice.

The BSP raised its overnight borrowing rate by a quarter-percentage point during its policy meeting in early June--the first monetary tightening in three years. It is widely expected to continue this "hawkish" stance or bias for monetary tightening for the rest of the year.

The next policy rate setting of the BSP's Monetary Board is on July 17.

"The buoyancy of domestic demand suggests some room for a measured policy response. Favorable conditions arising from a respectable and still solid domestic growth as well as a strong external payments situation imply that the economy can withstand a measured tightening," according to the minutes of the last board Monetary Board in early June.

In Asia and the Pacific, Indonesia, China and Taiwan also raised their benchmark interest rates during their latest policy meetings.

The inflation-targeting BSP forecasts consumer prices to rise by an average of 7.0-9.0 percent this year, overshooting its maximum limit of 5.0 percent. For next year, average inflation was expected to decline to 4.0-6.0 percent versus the maximum target of 4.5 percent.