Preliminary data show that domestic liquidity (M3) grew by 13.5 percent year-on-year to about ₱10.7 trillion in February 2018, faster than the 12.8-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.5 percent.
Domestic claims grew by 13.8 percent in February, higher than the 13.6-percent (revised) increase in January due to sustained growth in bank lending. 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; financial and insurance activities; and information and communication. Likewise, net claims on the central government remained generally steady at 3.7 percent from 3.6 percent (revised), in part due to continued borrowings by the National Government.
Net foreign assets (NFA) in peso terms grew, albeit slower, at 4.6 percent year-on-year in February from 4.9 percent (revised) in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts drove the growth in the BSP’s NFA position. The NFA of banks also expanded as banks’ foreign assets increased on account of higher loans and investments in marketable debt securities.
The growth in M3 remains consistent with the BSP’s prevailing outlook for inflation and economic activity. Nevertheless, the BSP will continue to closely monitor domestic liquidity to ensure that monetary conditions remain conducive to maintaining price and financial stability.