BSP: Budget planners' 3% to 5% inflation goal can withstand $120 oil prices

Economic planners of the Aquino administration have decided on “the retention of the inflation target of 4 ± 1 percent for 2012-2014,” said the Bangko Sentral ng Pilipinas (BSP), which also revealed that the target will hold true even if world oil prices climb to $120 per barrel. Addressing reporters’ queries on the possible impact of rising oil prices, BSP Deputy Governor Diwa Guinigundo revealed that a “stress test” the central bank ran showed inflation staying with the target range even if the cost of crude oil per barrel reaches $120.   In a statement, the BSP said the Development Budget Coordination Committee adopted its latest resolution on the inflation goal last Wednesday, Feb. 22, after a review of the impact of the decision of the National Statistics Office to use 2006 as the base year for its computations of the consumer price index.   “Firstly, analysis of available data showed that the old 2000-based CPI and the new 2006-based CPI series are not statistically different from each other and that there appeared to be no significant upward bias in the new CPI series,” the BSP said.   It also explained that the inflation target “represents the desired long-range inflation level and should be maintained to serve as an anchor for the public’s expectations about future inflation…”   Baseline forecasts of the BSP showed the 3 – 5 percent target for 2012 and 2013 is “supported by well-anchored inflation expectations.” — ELR, GMA News