Money supply growth slows in December —BSP

Money supply continued to grow in December — albeit at a slower pace than the previous month — given the drop in bank lending during the period, the Bangko Sentral ng Pilipinas (BSP) reported Wednesday.

Preliminary data released by the central bank showed that domestic liquidity (M3) expanded by 9.5% year-on-year to P14.207 trillion in December, slower than the 10.5% growth in November with P13.678 trillion, but still higher than the P12.976 trillion in December 2019.

The BSP cited "tepid bank lending activity" in December as domestic claims only grew by 4.7% year-on-year in December versus 6.7% in November, with loans for production activities eased, specifically for trade, motor vehicle repairs, manufacturing, and financial activities.

Consumer lending likewise expanded at a slower rate due to the slowdown in credit card loans, motor vehicle loans, and salary-based consumption loans; while net claims on the central government rose 31.8% in December due partly to sustained borrowings by the national government.

Net foreign assets (NFA) in peso terms also grew in December at 25.2%, faster than the 22.9% in November, reflecting the increase in the country's gross international reserves during the month. NFA of banks likewise rose -- albeit at a slower pace versus the previous month -- on lower loans and investments in marketable securities.

"The overall stance of monetary policy is expected to remain accommodative while economic recovery gets underway. At the same time, the BSP stands ready to deploy further monetary policy measures as necessary in order to ensure adequate support to economic activity while maintaining price and financial stability," the BSP said.

The central bank reduced policy rates by 200 basis points in 2020 — 25 basis points in February; 50 basis points each in March, April, and June; and another 25 basis points in November.—AOL, GMA News