Preliminary data show that domestic liquidity (M3) grew by 14.3 percent year-on-year to about P11.0 trillion in May 2018, slightly faster than the 14.2-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.3 percent.

Domestic claims grew by 16.8 percent in May, higher than the 16.4-percent increase in April due to sustained growth in bank lending.

Growth in bank loans continued to be driven by lending to key production sectors such as wholesale and retail trade, repair of motor vehicles and motorcycles; real estate activities; financial and insurance activities; manufacturing; and electricity, gas, steam and airconditioning supply.

Likewise, net claims on the central government rose by 17.3 percent in May from 13.1 percent (revised) in April as a result of increased borrowings by the National Government.

Meanwhile, net foreign assets (NFA) in peso terms grew by 5.4 percent year-on-year in May from 4.2 percent in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts drove the growth in the BSP’s NFA position. The NFA of banks also expanded as banks’ foreign assets increased on account of higher loans and investments in marketable debt securities.

The overall pace of growth in M3 remains broadly in line with the BSP’s prevailing outlook for inflation and economic activity. Nevertheless, the BSP will continue to closely monitor domestic liquidity to ensure that monetary conditions are conducive to maintaining price and financial stability.