Inflation within target of 2%-4% next year – BSP chief
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. is fairly confident that – barring any unexpected global and local supply shocks – the inflation rate will stay within the government target of two percent to four percent in 2024.
“We’re not out of the woods yet but we’re within striking distance of our target range which is between 4% and 2%,” said Remolona during a Philippine Economic Briefing (PEB) on Nov 15. (Nov. 16 Philippine time) in San Francisco, California. He is with other economic managers for the PEB, on the sidelines of the Asia-pacific Economic Cooperation 2023 Summit in the US.
Remolona said next year’s inflation path is seen to breach the target in some months especially in the second quarter 2024, but will largely stay within the expected range.
“For 2024, I think (that) for most of the year (it will be) between 4% and 2%. Around April to July it will approach the ceiling and even exceed the ceiling but for most of the year, we should be between 2% and 4%,” said the BSP chief.
Remolona said the country’s inflation rates “have been very high for the past couple of years as it has been for the rest of the world” despite tightening the policy rate by a cumulative 450 basis points (bps) from May 2022 until October 2023.
The BSP’S Monetary Board will decide Thursday, Nov. 16, the next policy rate while Remolona, who is the chairman of the policy-making body, is in the US.
The last time the BSP raised the key rate was Oct. 26 in an off-cycle decision. It was an expected rate hike of 25 bps.
As for the Nov. 16 policy meeting, the market expects the BSP will opt for a hold stance with a lowerthan-expected October inflation of 4.7 percent and a higher-thanexpected economic growth of 5.9 percent for the third quarter.
Based on the minutes of the Oct. 26 Monetary Board meeting, the BSP’S latest staff risk-adjusted inflation forecast for 2024 is 4.7 percent, which is higher than the baseline forecast of 3.5 percent during the Sept. 21 Monetary Board meeting.