Domestic Liquidity Growth Slows in September


Preliminary data show that domestic liquidity (M3) grew by 14.5 percent year-on-year to ?10.1 trillion in September 2017, slower than the 15.4-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 0.7 percent.

Domestic claims grew by 16.1 percent in September, lower than the 16.9-percent increase in August. This was mainly due to slower growth in net claims on the central government, which eased to 10.0 percent as borrowings by the National Government increased at a moderate pace relative to the previous month. Meanwhile, credit to the private sector continued to expand at a robust pace due to sustained demand for credit, even as lending to households appears to have slowed. Growth in bank loans was supported mainly 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; financial and insurance activities; other community, social and personal activities; manufacturing; and information and communication.

Net foreign assets (NFA) in peso terms were flat in year-on-year terms in September after growing by 6.4 percent in the previous month. The BSP's NFA position declined during the month, reflecting the decrease in gross international reserves. Meanwhile, the NFA of banks expanded due to the growth in banks' foreign assets as a result of higher loans and investments in marketable debt securities.

The overall pace of growth in M3 remains in line 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 consistent with the BSP's price and financial stability objectives.

Source: Bangko Sentral ng Pilipinas (BSP)