Accurate and efficient: BSP’s inflation forecasts shine in evaluation report, surpassing private sector peers

The Bangko Sentral ng Pilipinas (BSP) said its ability to forecast inflation is more than adequate, and that its forecasting performance are generally “accurate, unbiased and efficient” during the last 12 years, even outperforming forecasts from the private sector.

In an evaluation report of its forecasting actions for the period 2010 to 2022, the BSP considers both its monthly and annual inflation forecasting performance as better than most, including that of the International Monetary Fund (IMF) and private sector economists.

According to the BSP’s latest Monetary Policy Report (MPR), after systematically assessing its inflation performance in terms of accuracy, unbiasedness, efficiency, and benchmarking with other forecasts, the BSP said that they have performed well and will continue to do so.

For the month-ahead inflation forecast for example, from 2010 to 2022 the BSP correctly predicted that actual inflation will settle within the forecast range 143 times out of 155 months, or a batting average of 92.3 percent.

The MPR also noted that 11 out of 11 month-ahead inflation forecasts in 2022 were within the forecast range announced by the BSP, which is usually the last working day of a given month.