Inflation Targeting In The Philippines

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Why is inflation targeting favorable as a monetary policy to the Philippine government? Inflation is good for the Philippine economy because these cater business growth. The Central bank of the Philippines has been tasked by the government to watch over the price stability on the country’s economy. A law has been passed for attaining price stability as a worldwide goal of the central banks. Typical Filipino family standard basket consumption’s average price of goods is measured using the Consumer Price Index. The most precise measurement in determining the inflation rate in one’s economy is CPI thus; it is being used by the PSA. The Philippine Statistics Authority forecasts the CPI, monthly. The Philippines is basing its inflation-targeting…show more content…
Inflation targeting focuses mainly on achieving price stability as the ultimate objective of monetary policy. With this approach, the central bank announces an explicit inflation target and promises to achieve it over a given time period. The target inflation rate is set and announced jointly by the BSP and the government through an inter-agency body. Although the responsibility of achieving the target rests primarily with the BSP, this joint announcement reflects active government participation in achieving the goal of price stability and government ownership of the inflation…show more content…
The decision of choosing the policy instruments in implementing a monetary policy action to attain the inflation targeting goals in a given term would rely on the following factors. (1) The occurrence of development and structure of the financial system. (2) The nature and degree of the policy action. (3) The quickness of the response of and the magnitude of effect in the monetary aggregate. Forming a basis on index is crucial to assure that this barometer of economic occurrence is truly contemplative on the current situation. Consumers’ preferences are changing over time leading to an outmoded fixed market basket of commodities. To catch the changes for a more relevant price comparison, in revising the fixed market basket, the sample outlet, the density and the base year embarked upon periodically. The market basket used in the construction of the 2000 CPI was drawn from the product of the new updating activity of the 1994 market basket for the state and selected
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