Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla expects inflation falling below the lower end of the government’s two- to four-percent target range early next year.
“Now, we expect that by the end of the third quarter or by the fourth quarter, we will already be below four percent. And indeed our models predict, because of high base effects, or as the past event was so high, we will be below two percent early 2024. In other words, by 2024, we will be near the midpoint of our target,” Medalla told participants of the Philippine Economic Briefing (PEB) in Frankfurt, Germany.
According to Medalla, inflation will ease back within the central bank’s two- to four-percent target by the end of the third quarter or early in the fourth quarter of this year.
The BSP Monetary Board sees inflation averaging 4.5 percent this year, still higher than the two- to four-percent target range, before easing to 2.8 percent next year.
Inflation accelerated to 5.8 percent last year from 3.9 percent in 2021, after hitting a 14-year high of 8.1 percent in December from eight percent in November.
To tame inflation and help stabilize the peso, the BSP raised key policy rates by 350 basis points that brought the benchmark rate to 5.50 percent, the highest in 14 years, from an all-time low of two percent.
Analysts still expect the BSP to deliver more rate hikes in the first half of the year, most of them expecting an additional 75-basis point increase for 2023.
