The Philippines’ central bank (BSP) raised its key policy rate by 25bp to 4.25% today, as expected. Rising food and fuel prices suggest that inflation will continue to accelerate in coming months and that the BSP’s target of keeping inflation within the 3-5% range may be at risk. We are sticking with our long-held view that the reverse repo rate will move up further and reach 5.0% by end-2011.
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