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Item Restricted The appropriateness of inflation targeting as a monetary policy framework in the Philippines(2002-03) Chan, Diana; Salvador, Pearl Marie; Reside, Renato Jr.Background and Purpose. Section 3 of the 1993 RA 7653 or the New Central Bank Act pronounces that the primary objective of the Bangko Sentral ng Pilipinas (BSP) is to maintain price stability conducive to a balanced and sustainable growth of the economy. This is necessary for the adoption of inflation targeting as a monetary policy of the BSP. This paper aims to show the appropriateness of inflation targeting as a framework for monetary policy in the Philippines at present. Methods. The study evaluates the presence of prerequisites of inflation targeting in the Philippines. It attempts to forecast inflation using the moving average model. This model is compared to the model of Diwa C. Guinigundo of the BSP. The presence of other prerequisites is evaluated based on the criteria used by recent studies. The nature of the analysis is largely exploratory and argumentative. Results. Results show that some of the preconditions of inflation targeting are present in the Philippines. But certain necessary conditions should still be met before the adoption of inflation targeting. Inflation forecasts of the current BSP model shows that it has a good forecasting ability. While Central Bank's independence and credibility are predicted as determining factors of success in the presence of political uncertainties. Conclusion. Present conditions appear to be an appropriate time for the Philippines to adopt inflation targeting as a monetary policy. Though certain preconditions have been met, progressive procedures should still be made to sustain the success of inflation targeting. Provisions of prescriptive covenants will ensure the accountability of the BSP in the event that targets are not met. These institutional and structural changes are deemed necessary by the authors to sustain the success of IT.