Demand for money or M3 decelerated to 14.9 percent year-on-year in August from 18.7 percent in July. On a month-on-month basis, seasonally-adjusted M3 declined by 1.6 percent in August from a 0.8 percent expansion in July.
Reflective of the strong external payments position, net foreign assets of banks continued to expand. Domestic liquidity growth was, however, tempered by the fall in net domestic assets, which declined by 4.6 percent in August from the marginal growth of 0.4 percent posted in July. The growth of credit to the public sector accelerated to 15.6 percent in August (from 10.7 percent in July), while the growth of credit to the private sector was broadly steady at 7.3 percent. The Net Other Items account (which includes SDAs and RRPs), however, showed a large drop following the policy measures implemented by the BSP in May.
The BSP will continue to closely monitor economic developments to ensure that monetary policy is delivering price stability and that inflation expectations are well- anchored.