BSP keeps 2%-4% inflation target until 2026

December 21, 2023

The Bangko Sentral ng Pilipinas (BSP) on Thursday, Dec. 21, said it will maintain the inflation target range of two percent to four percent over the next three years (2024, 2025 and 2026).

The BSP normally announces a three-year target for inflation. It did not mention extending the target beyond 2026.

According to the BSP, “the government’s decision to retain the medium-term inflation target underpins the BSP’S resolute commitment to take all necessary action to bring inflation to a target-consistent path over the medium term.”

It added that it “will remain vigilant and data-dependent in deciding on monetary policy in order to steer inflation to a target-consistent path, fostering price and financial stability in the country.”

The three-year medium-term inflation target is consistent with BSP’S “forward-looking approach to monetary policy formulation to keep inflation expectations anchored to the inflation target.”

BSP Governor Eli M. Remolona Jr. has said that for an economy the size of the Philippines, targeting an inflation path of two percent to four percent is appropriate.

He said the current inflation target range is just right to ensure price stability.

The BSP on Thursday reiterated this, and said that “given the current structure of the Philippine economy, recent economic developments, and the overall macroeconomic outlook over the next few years” the existing target range remains appropriate.

Meanwhile, the BSP is confident that inflation outlook is still supportive of economic growth, despite its current high levels. As of end-november, the inflation rate averaged at 6.2 percent, slightly above the high-end part of the target range.