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The Importance Of Inflation Targeting

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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.
Every individual must be aware about the price …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 central bank uses various monetary policy instruments at its disposal to achieve the inflation target. In the Philippines, this involves mainly adjustments in the BSP’s key policy interest rates. The BSP uses other instruments such as rediscounting and reserve requirement. The BSP provides regular reports explaining its policy decisions, assessment of the inflation, environment and inflation outlook.
The National Economic and Development Authority declared that the country’s inflation rate continue to dive further from 1.6 percent in May to a record low of 1.2 percent in June this year .
The sufficient supply of food and moderate price pushes the energy and the oil rates decreases the inflation throughout two decades, according to NEDA. In addition, the inflation a year ago was at 4.4 percent.
For the record inflation rate from June 2015 is the lowest, from 1995 to June 2015 using the currency base on the 2006 the monthly inflation series, aside from that the rate was also below the market expectation of 1.5 percent and within the inflation target range of 2 to 4 percent set by the administration for

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