Growth in domestic liquidity or M3 slowed down further to 19.4 percent year-on-year in June from the 20.5 percent (revised from 21.1 percent) posted in May. On a month-on-month basis, seasonally adjusted M3 expanded by 1.2 percent in June after contracting by 1.1 percent in May. BSP-initiated measures as well as some base effects are seen to have contributed to the slowdown in domestic liquidity during the period.
The growth of both net foreign assets and net domestic assets of depository corporations slowed down in June to 31.1 percent and 3.8 percent, respectively, from 32.4 percent and 5.7 percent in the previous month. Credit extended to the public sector expanded at a slower pace from 11.9 percent in May to 10.5 percent in June, contributing to the slowdown in net domestic assets. In contrast, private sector credit continued to accelerate (from 5.4 percent to 6.0 percent) during the same period, consistent with the economy’s growth momentum.
This liquidity trend is in line with the BSP’s expectation of the absorptive impact of the new monetary measures implemented in early May and supports the BSP’s view of a benign inflation outlook for the policy horizon. The BSP will continue to closely monitor developments in domestic liquidity to ensure that monetary policy is delivering price stability, which is conducive to the balanced, broad-based and durable expansion of economic activity.