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Monetary Policy

The Inflation Target

The Development Budget and Coordination Committee (DBCC), an inter-agency economic planning body together with the BSP sets the annual inflation targets. The government's inflation target is defined in terms of the average year-on-year change in the consumer price index (CPI) over the calendar year. The BSP makes the announcement of the inflation target two years in advance. In line with the inflation targeting approach to the conduct of monetary policy, the DBCC in coordination with the BSP, through DBCC Resolution No. 2019-1 dated 26 February 2019, decided to keep the current inflation target at 3.0 percent ± 1.0 percentage point for 2019-2020 and to set the inflation target at 3.0 percent ± 1.0 percentage point for 2021-2022.

Inflation targeting is an approach to monetary policy that involves the use of a publicly announced inflation target set by the Government, which the BSP commits to achieve over a two-year horizon. Promoting price stability is the BSP's main priority, and the target serves as a guide for the public's expectations about future inflation, allowing them to plan ahead with greater certainty.