BSP sees inflation easing to target range by Q4

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno stated that inflation expectations remain anchored to the 2-4% target, despite inflation exceeding 4% since January.

The April inflation rate of 4.5% is consistent with the BSP's outlook that inflation will breach the target in the first half of the year due to supply-side pressures.

However, inflation is expected to settle close to the midpoint of the target range in 2022, with deceleration beginning in the fourth quarter of this year.

The BSP anticipates higher inflation expectations for 2021 but anchored expectations for 2022 and 2023, with near-term elevated expectations reflecting upside risks from supply disruptions and rising global crude oil prices.

The timely approval of the temporary cut in pork import tariffs is expected to help address supply constraints and ease price pressures.

The balance of risks to the inflation outlook is seen as balanced in 2021 and on the downside in 2022.

The ongoing pandemic poses downside risks to inflation and growth, but improvements in external demand and the vaccination program are expected to bolster economic recovery.