Demand for money continued to grow in April 2001 as the year-on-year growth in domestic liquidity (M3) accelerated to 13.1 percent from 10.5 percent in March. On a monthly basis, domestic liquidity increased by 2.3 percent in April from 1.2 percent in March. The expansion in domestic liquidity could be traced partly to the sustained rise in reserve money, which grew by 9.6 percent in April.
The continued expansion in domestic liquidity also reflected the greater supply of credit being channeled to the economy. Total net domestic credits grew by 11.6 percent year-on-year in April, up from 10.7 percent in March. Credits to the private and public sectors rose by 7.8 percent and 21.6 percent, respectively, during the same period.
The BSP will continue to provide the appropriate level of domestic liquidity to achieve non-inflationary output growth. The monetary authorities’ easing bias in recent months is a manifestation of this stance of monetary policy. It may be recalled that the BSP has reduced policy rates by a total of 600 basis points since December 2000. The most recent downward adjustment in policy rates was effected last 18 May 2001.
The BSP will continue to closely monitor and assess domestic and external conditions to ensure that the monetary policy setting is supportive of low and stable inflation, which should provide the basis for sustained economic growth.