MANILA: The Philippine central bank said on Monday it may consider a stronger monetary policy response if elevated inflation expectations become entrenched, vowing it “will take all necessary action” to ensure that inflation returns to its 3% target.

“If the data and our assessment of evolving risks point to higher inflation expectations becoming entrenched, then we may consider a stronger response,” the Bangko Sentral ng Pilipinas said in an emailed response to a Reuters query.

The BSP raised its key policy rate by 25 basis points to 4.50% in April.

Here are more details and context of the central bank’s responses:

The BSP said it does not target a specific exchange rate level and intervenes only when excessive volatility poses a serious risk to inflation expectations.

The peso has risen 6.1% vs. the dollar in the last three months, according to LSEG data.

The Philippines is sensitive to oil price shocks due to its high dependence on oil imports and current account deficits, but a weaker peso cushions the impact by supporting exports, remittances and revenues from business process outsourcing, the BSP said.

BSP Governor Eli Remolona said in May the central bank was considering an off-cycle rate hike ahead of a scheduled meeting on June 18.

Annual inflation hit 7.2% in April, the highest in three years and well above the 2%-4% comfort range of the Philippine central bank.