The Bangko Sentral ng Pilipinas (BSP) is studying setting an inflation target in a single digit instead of a range as it strives to keep prices of goods and services low.

BSP’s current targeting on overall inflation is within a range, such as 2 percent to 4 percent this year.

“Maybe 2 percent is good enough,” BSP Governor Eli Remolona Jr. said last Friday in a meeting with the media at the BSP Main Office in Malate, Manila City.

Remolona said the single-digit target, which some countries like the US implement, arose from his talks with the International Monetary Fund (IMF) representatives.

Homework always done

“We’re doing our own homework and the IMF is doing its own homework,” he said. 

“Initially, they were thinking of a point as a target level, but if we’re at 3.9 percent, that is just as good as 3 percent,” Remolona added.

Remolona said the level will be closer to 3 percent if the inflation target shifts to a single digit, as the Philippine economy is expected to sustain growth. However, he stressed that the study’s results will not be available soon.

“The reason it is not zero is because in a growing economy, you have to allow relative prices to change,” he said. 

A growing economy exhibits increasing inflation as businesses are forced to raise consumer prices to keep up with the strong household demand for goods and services.