BSP maintains 2%-4% inflation target until 2022

Published December 18, 2019, 12:00 AM

by manilabulletin_admin

By LEE C. CHIPONGIAN

The Bangko Sentral ng Pilipinas (BSP) announced Wednesday that the two-four percent inflation target range for 2020 and 2021 will also be adopted for 2022, as approved during the recent meeting of the inter-agency Development Budget Coordination Committee (DBCC).

In a statement, the BSP said the two-four percent inflation target for 2020 until 2022 is an appropriate “quantitative representation” of its medium-term price stability goal and “conducive to the balanced and sustainable growth of the Philippine economy.”

The BSP also said that the inflation forecasts which is 2.9 percent for 2020 and 2021 gives confidence that the over the policy horizon, inflation will continue to be within-target “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.”

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

It added that “demand-induced price pressures” will continue to be manageable in the next three years at least.

“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,” said the BSP.

In the same statement, the central bank explained that the inflation target is defined in terms of the average year-on-year change in the consumer price index (CPI) over the calendar year. “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,” it said.

 
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