On Thursday evening, the Bangko Sentral ng Pilipinas (BSP) released preliminary data on domestic liquidity (M3) and total bank lending for October.

M3 grew by 8.3 percent year-on-year to about P19.1 trillion, up from September’s 7.6 percent. Meanwhile, outstanding loans from universal and commercial banks (U/KBs) expanded by 10.3 percent year-on-year, slightly lower by 0.2 percentage points from the previous month. Month-on-month, however, U/KB lending increased by 0.6 percent after seasonal adjustments.

M3 is the broadest measure of money supply, covering cash, bank deposits, and large, less-liquid instruments such as institutional funds and big time deposits. Higher M3 typically supports increased lending, while more lending likewise boosts deposits — a circular flow that keeps liquidity moving through the economy.

But in October, this usual cycle was disrupted, largely due to sharp peso volatility. The local currency fell to a record low of P59.17 per dollar on 28 October, affecting liquidity conditions.

The BSP closely tracks M3 and bank lending as key inputs in deciding whether to cut interest rates. The central bank today entered its “Quiet Period,” which bars BSP officials from discussing potential policy decisions — including rate cuts — ahead of next Thursday’s Monetary Board meeting on 11 December.

Market participants have been expecting a rate cut to inject more liquidity into the economy. BSP Governor Eli M. Remolona Jr. earlier said a December cut was “on the table,” but clarified on Wednesday that further easing is “not assured.”

The BSP said it remains committed to ensuring that liquidity and lending conditions stay consistent with its price stability and financial stability mandates.