Domestic liquidity or M3 grew by 11.4 percent year-on-year to P2.9 trillion in October 2007, maintaining the same growth momentum as in the previous month. On a month-on-month basis, seasonally adjusted M3 grew by 1.7 percent in October, a reversal of the 1.1 percent decline in the previous month.
Net foreign assets (NFA) of depository corporations continued to drive M3 expansion, even as NFA growth slowed down slightly to 29.7 percent year-on-year from 32.2 percent in September. This trend is associated with the continued foreign exchange inflows from overseas Filipino (OF) remittances, exports, and direct and portfolio investments.
Meanwhile, net domestic assets (NDA) declined for the third consecutive month (by 6.0 percent in October), as the Net Other Items account (which includes SDAs and RRPs) continued to reflect a negative balance following the policy measures implemented by the BSP in May. The growth of credit extended to the public sector slowed down to 8.3 percent from 11.6 percent in September. Similarly, the growth of credit extended to the private sector decelerated to 4.8 percent from 8.5 percent in the previous month, as other funding sources supplemented the credit extended by the banking system to the corporate sector.
The BSP will continue to closely monitor developments in domestic liquidity to ensure that monetary policy is delivering price stability, which is conducive to a broad-based, durable and robust expansion of economic activity.