BSP aims for 2% inflation target
Provided by Philippine Daily Inquirer.
(2025/05/26-02:11)
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) aims to bring its target inflation rate closer to 2 percent, shifting to a single-point goal instead of a target band as early as next year.
BSP Governor Eli Remolona Jr. explained that adopting a single-point target aligns the Philippines with countries like the United States, where a specific inflation rate is preferred for clearer policy guidance.
When asked for a reasonable target inflation rate for a growing economy like the Philippines, Remolona suggested that around 2 percent would be appropriate.
READ: Inflation seen to stay on target thru 2025
“Maybe 2 percent is good enough. We don’t know. We’re crunching the numbers. We’re doing our own homework,” he told reporters during a roundtable discussion last week.
He also explained that a zero percent inflation target was not ideal for a growing economy like the Philippines.
“The reason it’s not zero is because in a growing economy, you have to allow relative prices to change. And when you allow relative prices to change, they tend to be sticky downwards,” Remolona said.
“So, allowing them to change means some inflation. And so, it constrains the economy if you have too low a target,” he added.
Slowdown
The country’s inflation slowed to 1.4 percent in April, down from 1.8 percent in March, largely due to slower increases in food prices and reduced transport costs.
The April figure came in lower than the 1.9 percent median forecast from the latest Inquirer survey of 10 economists conducted during the last week of the month.
The rate fell within the central bank’s projected range of 1.3 to 2.1 percent for the period. INQ
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