The inter-agency Development Budget Coordinating Committee’s (DBCC) Executive Technical Board has approved an increase in inflation forecast to 3.5 percent to a high of 5.5 percent for 2010.

The forecast, for the first time in years, is the same as the target.

The inflation forecast and target for 2011 is also the same at three percent to five percent. The DBCC-ETB has approved the new forecast last Monday.

The Bangko Sentral ng Pilipinas (BSP) Monetary Stability Sector, in a communication to the Monetary Board, said the latest forecasts are well-anchored and the rate is expected to remain “low and stable.”

“Over the near term, the manageable inflation environment is expected to be sustained,” the memo, signed by BSP Director Antonio B. Cintura said.

“Inflation is expected to settle within the four percent plus-or-minus one percentage point target range for 2011.”

In the next six years beginning in 2011, however, Cintura said the BSP’s forecasts of inflation is expected to be lower, or within the three percent to five percent range.

“These forecasts are supported by indications of well-anchored inflation expectations based on the BSP’s and the private sector inflation expectations surveys as well as from the results of the BSP’s consumer expectations survey, and the business expectations survey,” said Cintura.

The same memo submitted to the Monetary Board last Thursday also informed monetary officials of the revised DBCC-ETB approved foreign exchange rate assumptions of P45-47:$1 for this year, as approved by the DBCC last April 26.

Cintura said the peso is expected to remain stable in the near term, supported by “respectable levels of reserves, sustained overseas Filipinos remittances and a rebound in exports and capital inflows over the longer horizon.”

The DBCC’s 91-day Treasury Bill rate assumptions, in the meantime, are still four percent to six percent for 2010 and 2011 while LIBOR 6-months is, however, revised lower at 0.5 percent to 2.5 percent for 2010 and one percent to three percent for 2011.

The previous interest rates assumptions were one to three percent for LIBOR 6-months.

The government’s Dubai Crude assumptions are also maintained at $70-$90 per barrel for 2010, but changed its 2010 projections to $75-$95 per barrel. Cintura quoted an International Monetary Fund report, the World Economic Outlook, that the oil price pressures will remain moderate in the near term.

“Over the medium term, oil price movements would be dictated upon by supply-demand balances (but) oil demand is expected to rise by a robust pace owing mainly to increased consumption by emerging and developing economies,” said Cintura.