The Bangko Sentral ng Pilipinas (BSP) said it is not changing the current inflation target range of two-four percent for 2022, 2023 and 2024.

The Development Budget Coordination Committee (DBCC), in consultation with the BSP during its Dec. 14 meeting, reaffirmed the BSP’s decision to retain the current inflation target range for the next three years.

According to the BSP, the inflation target range of two-four percent “continues to be an appropriate quantitative representation of the medium-term goal of price stability given the current structure of the economy and outlook for macroeconomic conditions over the next few years.”

The BSP said economic recovery on the demand side is still “robust” however the economy “is likely to operate below its full capacity in the near term” and this implies limited demand-pull price pressures.

The BSP also expects domestic recovery to gain traction over the medium term with government’s intensified vaccination program against COVID-19 and the “calibrated” relaxation of mobility restrictions. The expected pick up in external demand will also support recovery.

“Low and stable inflation—as represented by the inflation target—remains supportive of the ongoing recovery process and the attainment of the goal of sustainable and balanced growth,” said the BSP. The Monetary Board has kept the benchmark policy rate at a record low of two percent since November 2020 in support of growth and recovery amid the above-target inflation.

On the supply side, the BSP continue to expect that global commodity prices such as oil and food will moderate over the medium term after the sharp increases in 2021. “It should be noted, however, that considerable risks continue to surround the prospects for global commodity prices,” it added.

The BSP said that with these factors into consideration, inflation forecasts still indicate that it will remain within the current target 2022 until 2024. “Inflation expectations likewise remain well anchored to the target,” it said.

The central bank also noted that “protracted dislocations” in the global supply chains could keep inflation elevated in the near term.

“The prevailing view is that the medium-term outlook would still likely be driven by fundamentals, supporting the decision to keep the current inflation target unchanged for 2022-2024,” said the BSP. Under the inflation targeting framework for monetary policy, the target is defined in terms of the average year-on-year change in the consumer price index over the calendar year.