During the Development Budget Coordination Committee (DBCC) meeting on 5 December 2022, the DBCC in consultation with the BSP, decided to retain the current inflation target of 3.0 percent ± 1.0 percentage point (ppt) for 2023 – 2024 and set the same inflation target for 2025 – 2026.
This announcement of the medium-term 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 inflation target range of 3.0 percent ± 1.0 ppt continues to be an appropriate quantitative representation of the medium-term goal of price stability that is optimal for the Philippines given the current structure of the economy and outlook for macroeconomic conditions over the next few years.
The Philippine economy is expected to sustain its growth momentum going forward, underpinned by easing mobility restrictions, increased investments, as well as the resumption of business and tourism-related activities.
Domestic demand is seen to remain firm amid the monetary policy tightening implemented by the Bangko Sentral ng Pilipinas (BSP) to safeguard price stability.
The policy interest rate increases will also support the medium-term growth outlook as price stability promotes efficient allocation of resources and preserves the purchasing power of households.
Global oil and food prices are expected to moderate over the policy horizon, thereby easing the pressures on prices of domestic goods.
However, domestic agricultural production continues to face challenges, particularly from weather disturbances, animal diseases, and global supply constraints. For this reason, the BSP continues to support the government’s implementation of timely non-monetary measures to address supply-side price pressures.
The government’s decision to retain the medium-term inflation target underpins the BSP’s commitment to take all necessary action to bring inflation to a target-consistent path in the medium term. The series of policy interest rate adjustments by the BSP are intended to address the risks to the inflation outlook and anchor inflation expectations over the policy horizon as the economy continues its recovery from the COVID-19 pandemic.
Going forward, the BSP will continue to closely monitor price developments and implement timely monetary policy action consistent with its mandate to maintain price and financial stability, conducive to sustainable economic growth.
