The Bangko Sentral ng Pilipinas (BSP) is projecting the inflation rate to fall below the two-per cent level for the last month of December extending up to January next year, but it is no reason to start adjusting interest rates.
BSP Deputy Governor Francisco G. Dakila Jr. explained that inflation below two percent vis-a-vis a three-four per cent target is only temporary.
He noted that the month-on-month inflation in December 2019 and January 2020 was at 0.7 per cent and 0.6 per cent, respectively. Inflation climbed to 2.9 per cent in January from 2.5 per cent in December.
“What’s more important is that for 2021, the baseline projection now stands at 2.8 percent (from three percent) and this is very much within the inflation target range.
Likewise, the 2022 baseline forecast is actually three percent which is exactly at the midpoint of the target, and so you can see the trajectory for inflation to move closer to the midpoint of the target as we go forward in the policy horizon. This also reflects the expected recovery in demand as the economy likewise recovers in 2021 and 2022,” explained Dakila.