Govt keeping 2%-4% inflation target – BSP


The Inter-agency Development Budget Coordination Committee (DBCC) has maintained the government’s inflation target at 2 percent to 4 percent for the next three years in line with the central bank’s assessment of latest developments.

“The 3.0 percent plus or minus 1.0 percentage point fixed annual target for 2016 to 2018 … remains suitable to the Philippine economy and is consistent with the country’s evolving price dynamics and sustained economic growth objectives,” the Bangko Sentral ng Pilipinas said late on Tuesday.

The medium-term inflation target is set by the DBCC in coordination with the central bank under the latter’s inflation targeting framework.

The current low inflation environment can be sustained over the medium term, the central bank said, as underlying dynamics are favorable with the domestic economy’s improved ability to accommodate supply shocks.

“In particular, compared to [the]pre-inflation targeting period, headline inflation has been observed to return faster to the target while the influence of the foreign exchange rate has diminished,” it noted.

In addition, the central bank said structural reforms could generate further productivity gains and raise the economy’s growth potential, allowing a respectable expansion and at the same time stable prices.

“Greater transparency in the conduct of monetary policy also enabled the firmer anchoring of inflation expectations to the inflation target,” it noted.

Going forward, the central bank said it would continue to ensure that the monetary policy stance remained appropriate, consistent with its primary mandate of safeguarding price stability that is conducive to a balanced and sustainable economic growth.

Following its final meeting for the year last December 17, the central bank’s policy-making Monetary Board said inflation could average 1.4 percent this year, inching up to 2.4 percent in 2016 and 3.2 percent in 2017.


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