Forecast inflation seen stable

The government’s inflation target is defined in terms of the average year-on-year change in the consumer price index over the calendar year.

Cabinet-level Development Budget Coordination Committee (DBCC), comprising the country’s most senior economic officials, have adopted the forecast inflation for 2020 to 2022 by the Bangko Sentral ng Pilipinas (BSP) as their own as well.

“In line with the inflation targeting approach to the conduct of monetary policy, the DBCC, during its meeting on 11 December 2019, decided to keep the current inflation target at (2 to 4 percent) for 2020 to 2022,” the BSP said.

“The government’s inflation target is defined in terms of the average year-on-year change in the consumer price index over the calendar year,” it added.

Also, the outlook reflects the central bank’s commitment to transparency and accountability as well as its forward-looking approach in monetary policy.

According to the BSP, the forecast inflation over the next two years is deemed appropriate as it represents the central bank’s medium-term price stability goal, which is conducive to a balanced and sustainable economic growth.

“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 BSP explained.

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

Sustained benign inflation environment and favorable demand-supply balance support the central bank’s outlook.

The BSP expects demand-induced inflation pressures to remain manageable over the target horizon.

“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,” it said.