2. Market Target
The success of Inflation Targeting depends on the
following preconditions:
Firm commitment to price stability.
Central bank independence.
Good forecasting ability.
Transparency.
Accountability.
Sound financial system.

3. Market Target
Government Sets
Inflation Target
2 Years in Advance
BSP Announces
Inflation Target
Decide if Inflation
Forecasts is inline with
the target.
BSP assess monetary
conditions, forecasts
inflation and decide on
the monetary policy
stance

4. Market Target
Explanation clauses or exemptions to the Inflation Target.
Volatility of
prices of
Agricultural
products
Changes in
government
policies
Explanation
Clauses
Changing oil
prices
Events that
major affects
the economy

5. Open Market
• It is an economic system with no barriers to free
market activity.
• An open market is characterized by the absence of
tariffs, taxes, licensing requirements, subsidies,
unionization and any other regulations or practices
that interfere with the natural functioning of the free
market.