7 July 2020
BSP statement on the medium-term view on inflation
The June 2020 inflation of 2.5 percent was within the BSP’s forecast range of 1.9 – 2.7 percent. The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation pressures remain limited due largely to the adverse impact of the Covid-19 pandemic on the domestic and global economic conditions.
The latest baseline forecasts suggest a benign inflation environment over the policy horizon. Inflation is expected to average at 2.3 percent for 2020, 2.6 percent for 2021, and 3.0 percent for 2022. Domestic economic activity is projected to follow a U- shaped quarterly recovery path with output likely to contract further in the remaining quarters of 2020. Growth is expected to recover in 2021 once the impact of government policy support measures gains traction. Meanwhile, the outlook for the global economy has further deteriorated with considerable uncertainty brought about by the magnitude and duration of containment measures across all economies.
The BSP remains committed to use of monetary instruments and regulatory relief measures when needed further in fulfillment of its mandate to promote non- inflationary and sustainable growth. The BSP likewise reiterates its support for the health and fiscal programs already being rolled out by the National Government to support the needs of Filipino households and firms amid the pandemic.
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