Money supply growth continues to slow
MANILA, Philippines - Recent monetary policy actions should create a supportive environment for the gradual deceleration in liquidity growth, the Bangko Sentral ng Pilipinas said, as M3 expansion continues to slide.
“While lower M3 growth rates are our goal, we also don’t want this scale down to be too abrupt, such that it would choke economic growth,” BSP Governor Amando M. Tetangco Jr. said in an e-mail to reporters.
“The goal of our policy action is to create an environment for a gradual M3 growth deceleration,” he said.
M3-the broadest measure of domestic liquidity-grew 23 percent to P7.07 trillion in June, slower than the 28.4 percent expansion recorded in May and the 32.1 percent growth in April.
The deceleration in M3 growth was a product of the BSP’s upward adjustments in the banks’ reserve requirement ratios and the special deposit account facility to rein in the relatively high liquidity growth.
The central bank expects M3 growth to return to early-teen levels before the year ends from the above 30-percent growth rates recorded earlier this year and late in 2013.
Domestic liquidity growth hit above 30 percent in July last year after the BSP cut the SDA interest rate by 150 basis points in 2013 and ordered investment management accounts in the facility withdrawn by end-November.
The BSP made adjustments on the facility to flush out funds and encourage investors to put them in other instruments benefitting the economy.
M3 grew below 30 percent for the first time in 10 months in May this year.
The BSP earlier this month said it is ready to deploy further measures to address potential risks to price and financial stability that may result from strong liquidity growth.
- Latest
- Trending