Preliminary data show that domestic liquidity (M3) grew by 15.4 percent year-on-year to about ?10.1 trillion in August 2017, faster than the 13.5-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.8 percent.

Demand for credit remained the principal driver of money supply growth. Domestic claims grew by 16.9 percent in August, higher than the 15.7-percent increase in July due largely to sustained growth in credit to the private sector. Growth in bank loans has remained strong on account of 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; other community, social and personal activities; agriculture, forestry and fishing; and financial and insurance activities. Meanwhile, net claims on the central government grew by 16.7 percent during the month as a result of increased borrowings by the National Government.

Net foreign assets (NFA) in peso terms also grew by 6.4 percent year-on-year in August from 2.7 percent in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos' remittances and business process outsourcing receipts continued to be the drivers behind the increase in the BSP's NFA position. Meanwhile, the NFA of banks expanded due to the growth in banks' foreign assets resulting from 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. Going forward, the BSP will continue to closely monitor domestic liquidity to ensure that monetary conditions remain conducive to maintaining price and financial stability.

Source: Bangko Sentral ng Pilipinas (BSP)