Domestic liquidity continued to post strong growth in January at 22.8 percent year-on-year, from 21.4 percent in December 2006. On a month-on-month basis, however, seasonally adjusted M3 growth slowed down to 1.7 percent compared to 2.0 percent in the previous month.
Steady foreign exchange inflows sustained the expansion in domestic liquidity. At the same time, domestic credit has started to pick up, with credit to the public sector accelerating to 20.3 percent from the previous month’s 6.7 percent growth. Private sector credit also rose, although at a slightly slower pace of 6.2 percent compared to 6.4 percent in December.
While the growth in domestic liquidity has not affected the downtrend in consumer prices, the BSP will continue to be attentive to the developments in monetary conditions in order to have ample room for any needed policy response that will ensure that the benign inflation environment is maintained over the policy horizon.