Preliminary data show that domestic liquidity (M3) grew by 13.2 percent year-on-year to about ?9.9 trillion in June 2017, faster than the 11.3-percent (revised) 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 15.4 percent in June, faster than the 14.3-percent growth in May 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; manufacturing; wholesale and retail trade, repair of motor vehicles and motorcycles; and information and communication. Meanwhile, net claims on the central government also accelerated to 14.0 percent during the month as a result of increased borrowings by the National Government.

Net foreign assets (NFA) in peso terms grew by 2.8 percent year-on-year in June from 4.6 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 expansion in M3 continues to be manageable and consistent with the BSP's current outlook for inflation and economic activity. Moving forward, the BSP will continue to monitor monetary conditions closely to ensure that overall domestic liquidity dynamics stay in line with the BSP's price and financial stability objectives.

Source: Bangko Sentral ng Pilipinas (BSP)