The Bangko Sentral ng Pilipinas (BSP) forecasted inflation rate for the month of January to be in the range of 3.4 percent to 4.3 percent, and still within its target band for 2014.
“Price pressures, including those weather-related, may have been moderated by decline in domestic fuel prices,” BSP Governor Amando Tetangco Jr. said in a text message on Tuesday.
Moreover, Tetangco said that the country’s monetary authority will continue to monitor not only domestic price pressure points, but also global developments such as the shift in sentiment versus emerging market economies as growth prospects in advanced economies improve.
“BSP continues to have policy space to respond to these and we will make policy adjustment as needed,” he added. The central bank is seeing a higher inflation rate for 2014 at 4.5 percent, and 2015 at 3.2 percent, still within its 3-percent to 5-percent target band but higher compared to 2013’s average inflation rate of 3 percent.
Inflation targeting is an approach to monetary policy that involves the use of a publicly announced inflation target set by the government, which the BSP commits to achieve over a two-year horizon.
Promoting price stability is the central bank’s main priority, and the target serves as a guide for the public’s expectations about future inflation, allowing them to plan ahead with greater certainty.