The Philippines posted its highest inflation in three years, hitting 4.1% in March 2026, up sharply from 2.4% in February. The Bangko Sentral ng Pilipinas responded by raising its policy rate to 4.5% on May 2, the first hike in over two years.
Central bank officials attribute the spike to ongoing Middle East tensions, which have disrupted energy routes through the Strait of Hormuz and driven up oil, diesel, and fertilizer prices.
The impact is global. Market pricing now reflects a 100% likelihood of a Selic rate hike by the Bank of Brazil. At the same time, odds of a Federal Reserve rate cut by June 2026 have collapsed to just 3%, as inflation control becomes the priority for central banks worldwide.