MANILA, Philippines - The Philippine central bank will pursue its exit strategy slowly with the global economic recovery still fragile, although domestic growth and inflation remained favourable, Governor Amando Tetangco said on Friday.

Tetangco told a business forum he was closely monitoring economic conditions especially in Japan, a major trading partner and the biggest provider of concessional development loans to the Philippines.

"We will follow a gradual and orderly exit strategy," Tetangco said at a business forum, in his first public appearance after undergoing a heart bypass last month.

"The macro-economic picture is still quite good," he said.

Tetangco reiterated inflation was expected to come in within target levels at 3.5-5.5% this year and 3-5% in 2011.

The central bank decided to keep rates on hold for the sixth meeting in a row on Thursday but cut the budget for lending short-term money to further retreat from crisis mode, adding other liquidity enhancing policies may be removed soon.