BSP Statement on the Medium-Term Inflation Path
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The August 2022 inflation outturn of 6.3 percent is within the BSP’s forecast range of 5.9 to 6.7 percent, consistent with the BSP’s assessment of elevated price pressures over the near term due to broadening price pressures. The uptick in inflation remains supply-driven, but signs of broadening price pressures are also being noted.
The BSP’s baseline projections continue to indicate above-target inflation in 2022, with inflation decelerating back to the target in 2023 and 2024 following the recent BSP policy rate hikes. At the same time, upside risks continue to dominate the inflation outlook in the near term due to the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, the sharp increase in the price of sugar, as well as pending petitions for transport fare increases. Meanwhile, the impact of a weaker-than-expected global economic recovery as well as the resurgence of local COVID-19 infections are the main downside risks to the outlook.
The BSP’s recent policy actions are intended to bring inflation and inflation expectations back to the target to ensure the balanced and sustainable growth of the economy in the medium term. The BSP is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term, consistent with its primary objective to promote price stability. The BSP also continues to urge timely implementation of non-monetary government interventions to mitigate the impact of persistent supply-side pressures on commodity prices.
The BSP will continue to carefully monitor and assess pertinent economic developments that could affect the price dynamics and growth prospects of the country. The Monetary Board will update its assessment of the macroeconomic outlook as well as conduct its review of the monetary policy stance on 22 September 2022.
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