Latest Bangko Sentral ng Pilipinas (BSP) data boost the likelihood the monetary authorities will keep the rate at which they lend to or borrow from the banks where they stood two weeks earlier when the policy-making monetary board (MB) announced an off-cycle adjustment.
This means the benchmark interest rate will likely remain steady at 6.5 percent based on forecasts by analysts at Moody’s Analytics, for instance.
The off-cycle exercise was in recognition of sharply higher supply-side driven pressure that would have induced second-round impact on commodities prices over an 18-month long policy horizon up ahead were it not for the timely BSP intervention.
This Thursday, 16 November, would have been the regularly scheduled rate-setting day for the still incomplete six-man MB.
Data suggesting a stay on the current monetary policy setting include domestic liquidity having grown at an annual clip averaging 7.9 percent in September that has helped keep bank loan growth buoyant at 6.5 percent as well.
While the data is preliminary, the BSP said domestic liquidity (M3) grew at an annual clip of 7.9 percent to ₱16.6 trillion in September from 6.8 percent in August. On a month-on-month seasonally-adjusted basis, M3 increased by about 1 percent.
Domestic claims expanded by 9.5 percent year-on-year in September from 9.3 percent (revised) in the previous month. Claims on the private sector grew by 6.3 percent in September from 7.5 percent (revised) in August, driven by the sustained expansion in bank lending to non-financial private corporations and households. Net claims on the central government rose by 19.2 percent in September from 15.2 percent (revised) in August, owing to the decline in deposits by the National Government with the BSP.
Net foreign assets (NFA) in peso terms increased by 1 percent in September from 3.5 percent (revised) in August. The BSP’s NFA grew by 2.3 percent in September after expanding by 3.2 percent in the previous month. The NFA of banks contracted on account of higher bills payable and foreign deposit liabilities.
While also preliminary, data show the outstanding loans of universal and commercial banks (U/KBs), net of reverse repurchase (RRP) placements with the BSP, increased by 6.5 percent year-on-year in September from 7.2 percent in August. On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs that dry up money supply, went up 0.7 percent.
Outstanding loans to residents, net of RRPs, rose 6.6 percent in September from 7.2 percent in August.
Growth in outstanding loans for production activities was registered at 4.9 percent in September from 5.5 percent in the previous month driven by the growth in credit to major sectors such as real estate (5.0 percent); electricity, gas, steam, and airconditioning supply (9.2 percent); wholesale and retail trade, and repair of motor vehicles and motorcycles (6.6 percent); financial and insurance activities (4.9 percent); and information and communication (8.1 percent).
The growth of consumer loans to residents proved generally steady at 23.5 percent in September from 23.1 percent in August driven largely by the sustained growth in credit card loans and faster expansion in motor vehicle loans.
Outstanding loans to non-residents went up at a slower rate of 0.3 percent in September from 8.4 percent in the previous month.
Looking ahead, the BSP vowed to continue ensuring that domestic liquidity and credit conditions are in line with its price and financial stability mandates.
