During the Development Budget Coordination Committee (DBCC) meeting held on December 3, the DBCC in consultation with the BSP, decided to retain the current inflation target range at 3.0 percent ± 1.0 percentage point (ppt) for 2021 ? 2022 and set the inflation target range at 3.0 percent ± 1.0 ppt for 2023 ? 2024.

Under the inflation targeting framework for monetary policy, the target is defined in terms of the average year-on-year change in the consumer price index (CPI) over the calendar year.

This announcement of the medium-term inflation target is in line with the BSP’s commitment to transparency and accountability as well as the forward-looking approach in the conduct of monetary policy.

The inflation target range of 3.0 percent ± 1.0 ppt, as approved by the DBCC, continues to be an appropriate quantitative representation of the medium-term goal of price stability that is optimal for the Philippines given the current structure of the economy and outlook of macroeconomic conditions over the next few years.

The assessment of factors that could influence inflation suggests manageable inflation environment over the near term. Latest BSP forecasts indicate that inflation will settle within the 3.0 percent ± 1.0 ppt target range for 2021 ? 2022. Moreover, inflation expectations are expected to remain firmly anchored to the National Government’s target.

For 2023 ? 2024, inflation would largely be influenced by the pace of economic recovery in the post-pandemic period.

The Philippine economy is expected to regain momentum as the health crisis is sufficiently addressed, while macroeconomic policies gain full traction in reviving the economy.

Nonetheless, the COVID-19 pandemic could lead to structural changes in supply and demand factors that determine the level of inflation as well as affect the country’s future productive capacity.

This reinforces the important role of the inflation target as an important guidepost for the BSP in ensuring inflation remains low and stable, which will be conducive to long-term economic growth.

Going forward, the BSP will continue to monitor closely price developments and ensure that the monetary policy stance remains appropriate in keeping inflation within target. BSP