Economic managers’ bold prediction: Stable consumer prices for next 3 years
The country’s economic managers expect prices of basic goods and services to remain relatively stable over the next three years, thanks to domestic policies that have managed to mitigate the risks from overseas markets.
In a statement, the Bangko Sentral ng Pilipinas (BSP)—the main agency in charge of ensuring price stability—said that the Development Budget Coordination Committee (DBCC) had decided to keep the current inflation target at 3 percent, plus or minus 1 percent, for the 2020-2022 period.
This was arrived at by the Duterte administration’s top economic managers during the interagency meeting last week, in line with the inflation targeting approach in the conduct of monetary policy.
The government’s 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, the BSP said.
It added that the 3 percent, plus or minus 1 percentage point, inflation target for 2020-2022 continued to be an appropriate quantitative representation of the BSP’s medium-term price stability goal that was conducive to the balanced and sustainable growth of the Philippine economy.
“Latest inflation forecasts indicate within-target inflation over the policy horizon, 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,” the central bank said, explaining that, while price volatility 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 said.
Similarly, demand-induced price pressures are likely to remain manageable over the target horizon.
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.
“The BSP remains steadfast in its commitment to its price stability mandate,” the central bank added. “Going forward, the BSP will continue to closely monitor inflation as well as the factors that influence inflation trends and ensure that the monetary policy stance remains appropriate to keeping inflation within the government’s target range.”
