BSP Reviews 2-4% Inflation Target

Monetary authorities are reassessing the current inflation target range of two to four percent, with Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. hinting that the three percent midpoint may no longer be appropriate given evolving domestic and global conditions.

- Keisha Ta-asan

"We're constantly reviewing our projections. We're also reviewing our inflation target. We're not sure whether it's at the right level," Remolona told Bloomberg TV in an interview.

"Right now, our target range has a midpoint of three percent. That may be a bit high," he said.

Most central banks globally have adopted a two-percent inflation target. Remolona said the BSP may consider aligning more closely with this norm, noting that the Philippines' higher target was originally meant to allow flexibility for price adjustments in a growing economy.

"We need some inflation to accommodate relative price adjustments in developing countries. But we don't know whether we need that much of a scope for relative prices," the BSP chief said.

"Maybe 2.5 percent is a better target. But we'll see. We're doing the math now and we'll know maybe next year," Remolona said.