The interagency Development Budget Coordination Committee (DBCC), in consultation with the Bangko Sentral ng Pilipinas (BSP), has kept the current inflation target of 3 percent, plus or minus 1 percentage point for 2024 – 2026.
This medium-term inflation target is in line with the BSP’s forward-looking approach to monetary policy formulation to keep inflation expectations anchored to the inflation target.
According to the BSP, the inflation target range remains an appropriate representation of its medium-term goal of price stability, given the current structure of the economy, recent economic developments, and the overall macroeconomic outlook over the next few years.
“The current and projected inflation environment continues to support the steady growth of the economy. At the same time, enactment of structural reforms is expected to help boost prospects for domestic economic activity, raise productivity, and help build a sustainable non-inflationary economic growth,” the BSP said in a statement.
The forecasts, the BSP said, indicate a likely deceleration in inflation in 2024 – 2025, given limited demand-based inflation pressures amid improving supply conditions.
However, the risks to the inflation outlook remain strongly tilted to the upside for both years, which requires close monitoring as well as readiness for further action as needed, the BSP cautioned.
The prevailing higher-for-longer stance of monetary policy, together with the implementation of the non-monetary measures by the government, is intended to ensure the sustained return of inflation to the medium-term target and keep inflation expectations anchored, it added.
The decision to retain the medium-term inflation target underpins the BSP’s commitment to take all necessary action to bring inflation to a target-consistent path over the medium term.
Looking ahead, the BSP will remain vigilant and data-dependent in deciding on monetary policy in order to steer inflation to a target-consistent path, fostering price and financial stability in the country.
