Growth in the country’s money supply as measured by M3—the total amount of cash and cash-equivalent of securities circulating within the economy—moderated further in January from late 2014 as the central bank carried on its mopping-up operations.
The latest official data showed that domestic liquidity or M3 in January stood at P7.5 trillion, reflecting a slower 7.7 percent increase compared with the revised 11.3 percent rise recorded in December last year.
Seasonally adjusted, M3 rose only 1.4 percent on a month-on-month basis.
Explaining the slowdown, the Bangko Sentral ng Pilipinas (BSP) said in a statement that during the month, placements of trust entities in its special deposit account (SDA) facility increased relative to a year ago.
The BSP also pointed out the base effects from the comparative year-earlier figures to explain the deceleration in domestic liquidity growth.
“M3 growth in January 2015 also reflects statistical base effects associated with the significant increase in domestic liquidity a year ago of 38 percent, following the operational adjustments involving access of trust entities to the BSP SDA facility, which were completed in November 2013,” it said.
Sustained demand for credit
Explaining the expansion, though slower, the BSP said money supply still grew on the back of sustained demand for credit, although it pointed out that domestic claims in January dropped to 10.8 percent from the revised 17.8 percent in December.
The bulk of the bank loans during the month was channeled into key production sectors such as real estate, renting, and business services, wholesale and retail trade, manufacturing, utilities, financial intermediation, and transportation, storage, and communication.
On the other hand, the BSP data also showed lending for the public sector contracted 2.2 percent after it grew a revised 19.4 percent in December “as deposits of the national government increased significantly due mainly to the proceeds from the auction of government debt papers, as well as revenue collections of various agencies.”