The Philippines’ central bank (BSP) kept its key policy rate unchanged at 4.0% today, as expected. The strong peso is doing some of the heavy-lifting for the BSP, but rates will probably need to move up during 2011 to ensure that inflation stays contained. Our forecast for the level of the reverse repo rate at the end of next year is slightly more aggressive than the consensus view, while our view on peso appreciation is far more bullish.