ASIAN central banks need to tighten monetary policy further to cope with inflation, a senior Government of Singapore Investment Corp (GIC) official said on Wednesday.

But inflation in the continent is unlikely to rise much further as oil and commodities prices are near peaks, said Dr Teh Kok Peng, president of GIC Special Investments, the Singapore sovereign wealth fund?s hedge fund and private equity arm.

'From where the high level is now, I don't see it going up much higher,' Dr Teh told a forum organised by Japanese broker Nomura, adding further energy price increases would bring economies to a halt.

Dr Teh said a near-term source of inflation in Asia was the removal of fuel subsidies by governments in the region.

On monetary policy, he said the region's central banks are 'somewhat behind the curve'.

Dr Teh, who has a PhD in economics from Oxford, said China's monetary policy was still too loose and predicted the central bank will tighten policy further to make sure core inflation did not rise more.

Inflation in many parts of Asia is at its highest in nearly a decade, and analysts worry this will lead to smaller real incomes and depress consumption at a time when the effects of the credit crisis is dampening global growth.

The Asian Development Bank said last month it expected to raise a 2008 inflation forecast for Asia from 5.1 per cent due to high energy and food prices.

On Singapore, Dr Teh, a former deputy managing director at central bank the Monetary Authority of Singapore (MAS), said authorities are very concerned about inflation.

Singapore's inflation in May held at a 26-year high of 7.5 per cent. The government expects inflation for the year to hit as much as 6 per cent although the Finance Minister Tharman Shanmugaratnam said last month high energy prices could threaten that target.

'MAS is very concerned about inflation because it has a reputation and track record to protect,' Dr Teh said.

GIC, one of the biggest sovereign wealth funds with an estimated $300 billion in assets, warned in April that the world could be facing its worst recession in 30 years and said financial markets would be highly volatile. -- REUTERS