Government maintains inflation target range at 3 percent ± 1 percentage point for 2024 – 2026

At the Development Budget Coordination Committee (DBCC) meeting on 15 December 2023, the DBCC in consultation with the BSP, decided to retain the current inflation target of 3.0 percent ± 1.0 percentage point (ppt) for 2024 – 2026.

This announcement on the medium-term inflation target is in line with the Bangko Sentral ng Pilipinas’ (BSP) commitment to transparency and accountability as well as the forward-looking approach to monetary policy formulation to keep inflation expectations anchored to the inflation target.

The inflation target range of 3.0 percent ± 1.0 ppt remains an appropriate representation of the medium-term goal for price stability, given the current structure of the Philippine economy, recent economic developments, and the overall macroeconomic outlook over the next few years.

The current and projected inflation environment continues to support the steady growth of the economy.  At the same time, enactment of structural reforms is expected to help boost prospects for domestic economic activity, raise productivity, and help build a sustainable non-inflationary economic growth.

The latest BSP forecasts indicate a likely deceleration in inflation in 2024 – 2025, given limited demand-based inflation pressures amid improving supply conditions.

However, the risks to the inflation outlook remain strongly tilted to the upside for both years, which requires close monitoring as well as readiness for further action as needed.

The prevailing higher-for-longer stance of monetary policy, together with the implementation of the non-monetary measures by the government, is intended to ensure the sustained return of inflation to the medium-term target and keep inflation expectations anchored.

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. Looking ahead, the BSP 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.