The Bangko Sentral ng Pilipinas on Monday maintained its forecast for average inflation this year and the next but said there was greater possibility of hitting the lower end of its forecasts.

It said inflation seemed to have peaked, but did not give details.

The central bank said in a statement after a policy meeting that the price outlook was improving and that inflation should slow to a single digit by the first quarter of 2009.

It has previously said inflation should average 9-11 percent in 2008 and 6-8 percent in 2009.

It said on Monday that inflation in September, to be announced on Tuesday, should be close to the lower end of an 11.8-12.7 percent band.

"Rising prices have shown significant easing in the last few months," deputy Governor Diwa Guinigundo told reporters.

Annual inflation came in at 12.5 percent in August, a  17-year high, and the central bank has previously said inflation would remain at double-digit levels in the third quarter before decelerating to single digit levels by March or April 2009.

In a related report, the central bank said on Monday it may be too early to say its policy bias had shifted to loosening monetary policy despite an improving outlook for inflation this year and next year.

Asked if the policy bias had changed to lowering rates, Guinigundo told reporters: "It might be too early."

But he said the central bank's decision to keep its current policy rates steady was largely due to the more favourable inflation outlook and price expectations.