Money supply grew 5.5 percent year-on-year to P17.4 trillion in August 2024, slower than the 7.3 -percent increase in July, the Bangko Sentral ng Pilipinas (BSP) said over the weekend.
The BSP said that on a month-on-month seasonally-adjusted basis, M3 marginally decreased by about 0.1 percent.
Domestic claims expanded by 10 percent year-on-year in August, compared to 11.4 percent in the previous month.
Claims on the private sector grew 11.9 percent in August, from 12.0 percent in July, driven by sustained expansion in bank lending to non-financial private corporations and households.
Net claims on the central government increased by 8.5 percent from 14.1 percent in the previous month on continued borrowings by the national government.
Net foreign assets (NFA) in peso terms rose 2.4 percent year-on-year in August, compared to 11.2 percent in July. The BSP’s NFA grew by 7.7 percent, while the NFA of banks contracted, largely due to higher bills and bonds payable.
The BSP said it would continue to ensure that domestic liquidity conditions are consistent with the prevailing stance of monetary policy, in line with its price and financial stability objectives.
“For the coming months, M3/domestic liquidity growth could pick up after the latest cut in banks’ reserve requirement ratio announced on Sept. 20, 2024 and effective Oct. 24, 2024 that could infuse about P400 billion in additional peso liquidity into the banking system/financial system [from the BSP] that may allow banks to increase lending and other investing activities,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.
“The BSP signaled possible further cut in banks’ RRR in 2025 and could be possibly reduced to zero within the term of BSP Governor Remolona from the current 7 percent for large banks, or equivalent to a total more than P1 trillion as of now; but any further RRR cuts, which add more peso liquidity in the banking/financial system, would be gradual in the coming years,” he said.
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