Preliminary data show that domestic liquidity (M3) grew by 12.8 percent year-on-year to about ₱10.6 trillion in January 2018, faster than the 11.9-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 2.0 percent.
Domestic claims grew by 13.5 percent in January, slightly slower than the 13.7-percent (revised) increase in December as growth in bank lending eased. Growth in bank loans continued to be driven by lending to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, repair of motor vehicles and motorcycles; manufacturing; information and communication; and financial and insurance activities. Meanwhile, net claims on the central government grew at a faster pace of 3.1 percent from 2.0 percent partly as a result of increased borrowings by the National Government.
At the same time, net foreign assets (NFA) in peso terms grew by 4.1 percent year-on-year in January from 2.2 percent (revised) in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments drove the increase in the BSP’s NFA position. The NFA of banks also expanded at a faster pace as banks’ foreign assets increased on account of higher loans and investments in marketable debt securities.
The growth in M3 is consistent with the BSP’s prevailing outlook for inflation and economic activity. Nevertheless, the BSP will continue to monitor monetary conditions closely to ensure that domestic liquidity conditions remain in line with the BSP’s price and financial stability objectives.