Monetary authorities expect prices of goods and services to trend upward over the next two years—coinciding with the Duterte administration’s enactment of new tax measures this year—but assured the public that the inflation rate would “remain manageable.”
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said authorities were ready to act preemptively if indications emerge that domestic prices would rise beyond levels deemed acceptable by government economic managers.
“Inflation is projected to settle above the midpoint of the target range for 2018 to 2019,” the BSP chief said following yesterday’s announcement that average prices of goods and services rose by 3.3 percent in December 2017 and 3.2 percent for the entire year.
Economic managers have set the government’s inflation target range at 2-4 percent for 2018-2019.
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“The BSP expects inflation to remain manageable over the policy horizon as 2017 inflation settled within the national government’s [2-4 percent] target range,” he said.
The inflation rate is watched keenly by monetary planners as it is the main indicator that determines the level of interest rates at which BSP transacts with banks and, by extension, determines the borrowing costs and investment returns across the local economy.
