Philippine liquidity up in July

The Philippine money supply increased in July on the back of higher lending activity to the private sector, data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed.

Data revealed that domestic liquidity, or M3—the broadest measure of money in the financial system—stood at P15.377 trillion in July.

This is 7.0% higher than the P14.372 trillion in the same month last year. It is 0.3% higher than the previous month on a seasonally adjusted basis but 0.4% lower than the P15.440 trillion recorded in June on an adjusted basis.

Domestic claims posted an annual growth of 11.5%, given higher lending to the private sector. This is faster than the 9.9% annual growth recorded in June.

Private sector claims expanded by 8.9%, given the sustained expansion in bank lending to non-financial private corporations and households, while net claims on the central government increased by 22.2%.

The BSP’s net foreign asset (NFA) position declined in July, indicating lower gross international reserves compared with the same month last year. Banks’ NFA also contracted on account of higher foreign deposit liabilities and bills payable.

"As the BSP proceeds with the withdrawal of monetary accommodation, it will continue to ensure that domestic liquidity conditions remain conducive to [sustaining] the economic recovery, in line with the BSP’s price and financial stability objectives," the central bank said.

The BSP earlier this month hiked key policy rates by 50 basis points — the overnight reverse repurchase facility to 3.75%, the overnight deposit facility to 3.25%, and the overnight lending facility to 4.25%.

BSP Governor Felipe Medalla has since maintained a hawkish stance, hinting at the possibility of more rate hikes moving forward. —VBL, GMA News