While there are no immediate revision plans, the Bangko Sentral ng Pilipinas (BSP) is considering shifting from an inflation target range to a single-point target, as its chief anticipates consumer prices to accelerate at a faster pace in the coming months.

“We’re seriously thinking of just having a point, a level, a target level,” BSP Governor Eli M. Remonola Jr. said during a press briefing on Friday, May 23. “In many other central banks, it's just one number.”

However, Remolona argued through an example that while 3.9 percent and three percent are both within the government’s current target band of two percent to four percent, these figures remain unequal.

Given the state of the Philippine economy, Remolona said a single-point inflation target of two percent could be reasonable. The BSP is still in the process of studying this approach.

“Maybe two percent is good enough. We don’t know. We’re crunching the numbers. We’re doing our own homework,” Remolona said, adding that the International Monetary Fund (IMF) is also “doing its own thing.”

Updates regarding the revision of targets will not be available in the near future, Remolona said, as the IMF is taking the necessary time to review the strategy.

“It was something we asked the IMF to look at. They won’t be able to give us something very soon. They take their time. But I’m comfortable with our band between two to four percent,” he said.

Previously falling far below the target band, Remolona now anticipates price changes to soar and clock back within the target.

“I think inflation will rise. Right now we're below our target band. I think inflation will rise to within the target band,” Remolona said. April inflation stood at 1.4 percent, the slowest in over five years or since November 2019.

Meanwhile, it fell within the lower end of the BSP’s forecast range of 1.3 percent to 2.1 percent.

As for the dollar-peso exchange rate, the BSP Governor said the central bank worries “a little bit about how volatile it becomes, but we worry more about how it evolves over months,” especially when the peso is on a losing streak or the eventual depreciation of the local currency.

“We have a threshold where we begin to intervene, essentially to dampen the swing. Because a losing streak, eventually is followed by a winning streak,” Remolona said. Another reason why the BSP wants to dampen these swings is its “asymmetric effect” on consumer prices.

“When it [peso] appreciates, when there’s an appreciation streak, it doesn’t do anything to inflation. But when there’s a losing streak, it does,” he explained.