1 week ago
4
Upgrade to High-Speed Internet for only ₱1499/month!
Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.
Visit Suniway.ph to learn
Louise Maureen Simeon - The Philippine Star
May 26, 2025 | 12:00am
Peg seen at 2% beginning in 2026
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is considering to fix its inflation target to possibly two percent by next year.
In a recent briefing, BSP Governor Eli Remolona Jr. said the central bank is thinking of revising the two to four percent inflation target band and just stick to a single number.
While he is comfortable with the current target band, Remolona said the BSP has already asked the International Monetary Fund (IMF) to look at such a possibility.
“We are seriously thinking of just having a point target level. If we are at 3.9 percent, that’s just as good as three percent and I don’t feel that way. Three percent is better than 3.9 percent, but we communicate between two and four percent,” Remolona said.
“In the US, it’s just two percent. In many other central banks, it’s just one number,” he said.
The US Federal Reserve seeks to achieve an inflation rate of two percent. The same goes with the European Central Bank with a target of two percent.
Even other notable central banks in the world such as the Bank of England and the Bank of Japan are aiming for two percent.
On the other hand, other influential central banks are similar to the BSP, with a wider range of inflation target including the Swiss National Bank with zero to two percent, Reserve Bank of Australia with two to three percent and the Bank of Canada and the Reserve Bank of New Zealand, both with one to three percent.
For the Philippines, Remolona said two percent is good enough but maintained that BSP is still crunching the numbers while awaiting IMF’s suggestion.
“The reason it is not zero is that in a growing economy, you have to allow relative prices to change. And when you do that, they tend to be sticky downwards. It constrains the economy if you have too low a target,” Remolona said.
The BSP Governor said narrowing the inflation target to a single digit would likely happen next year.
