Inflation target fixed at 2%-4% until 2022

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) expects inflation at between two and four percent for 2022 as inflationary pressures from international commodities are expected to remain modest.

BSP Governor Benjamin Diokno said the two to four percent inflation target for 2020 – 2022 continues to be an appropriate quantitative representation of the central bank’s medium-term price stability goal that is conducive to the balanced and sustainable growth of the Philippine economy.

He said the announcement of the inflation target is in line with the BSP’s commitment to transparency and accountability, as well as the forward-looking approach in the conduct of monetary policy.

“Latest inflation forecasts indicate within-target inflation over the policy horizon, even as the balance of risks to the inflation outlook continue to lean slightly toward the upside in 2020 and toward the downside in 2021,” Diokno said.

While price volatilities cannot be ruled out, the BSP chief pointed out inflationary impulses from international commodity prices are expected to remain modest.

He said this expectation is supported by the current assessment of favorable demand-supply balance and lower pass-through to domestic inflation of exchange rate and international commodity price inflation.

“Similarly, demand-induced price pressures are likely to remain manageable over the target horizon. Improved productive capacity of the domestic economy, fueled by higher infrastructure investments by the national government alongside the implementation of purposeful structural reforms, implies continued robust economic growth amid a low and stable inflation environment,” he said.

Diokno said the BSP remains steadfast in its commitment to price stability mandate.

“Going forward, the BSP will continue to closely monitor inflation as well as the factors that influence inflation trends and ensure that the monetary policy stance remains appropriate to keeping inflation within the government’s target range,” he said.

Based on its latest assessment, the BSP expects inflation to average 2.4 percent this year before picking up to 2.9 percent in 2020 and 2021.

Inflation averaged 2.5 percent from January to November this year. It accelerated to a three-month high of 1.3 percent in November after bottoming out at a 43-month low of 0.8 percent in October.