Preliminary data show that domestic liquidity (M3) grew by 7.1 percent year-on-year to about ?11.5 trillion in February 2019. This was slower than the 7.7-percent (revised) expansion in January 2019. On a month-on-month seasonally-adjusted basis, M3 increased by 0.8 percent.

Demand for credit eased but remained the principal driver of money supply growth. Domestic claims grew by 11.7 percent in February from 12.4 percent (revised) in the previous month due mainly to the sustained growth in credit to the private sector. Loans for production activities continued to be driven by lending to key sectors such as real estate activities; wholesale and retail trade, repair of motor vehicles and motorcycles; financial and insurance activities; manufacturing; construction; and electricity, gas, steam and airconditioning supply. The growth of loans for household consumption was higher in February amid the acceleration in credit card loans, sustained growth in motor vehicle loans, and expansion of salary-based general purpose consumption loans and other types of household loans during the month. Growth in net claims on the central government likewise increased to 8.3 percent in February from 5.3 percent in the previous month.

Meanwhile, net foreign assets (NFA) in peso terms contracted by 1.5 percent year-on-year in February after declining by 1.2 percent in the previous month. The NFA of banks decreased anew even as banks' foreign assets rose as a result of higher loans and investments in marketable debt securities. By contrast, the BSP's NFA position continued to expand in February, supported by foreign exchange inflows coming mainly from overseas Filipinos' remittances, business process outsourcing receipts, and foreign portfolio investments.

The BSP will continue to closely monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability.

Source: Bangko Sentral ng Pilipinas (BSP)