Consumer loans continued to expand in October this year but at a slower pace of only 22.8 percent from 23.5 percent in September, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
Given similarly sustained expansion in production loans averaging 5.9 percent in October from 4.9 percent in September, these developments help bolster the view that the policy-making monetary board of the BSP will opt to keep a steady hand over the rate at which it borrows from or lends to banks when it meets tomorrow, Thursday to decide which way interest rates were encouraged to go over the next 18 to 24 months.
Data show consumer loan growth, which includes credit card, motor vehicle, salary and general purpose loans, steady at 10.7 percent on October, or the same rate of expansion posted in September. In absolute terms, consumer loan growth steadied at P1.212 trillion from P1.193 a month earlier.
Production loans, which benefited the manufacturing sector, wholesale and retail trade, the financial and insurance sector as well as real estate the most, proved a tad slower in October to 87.4 percent from 87.7 percent in September.
All these loans together, including those obtained by the BSP from the various banks as part of its monetary policy management goals, resulted to loan growth averaging 6.9 percent in October from 7.7 percent in September.
This developed as domestic liquidity or M3, essentially money accessible by businesses and households, grew 8.2 percent to P16.7 trillion, or the same rate of expansion posted in September, the BSP said. This helps explain why inflation, or the rate of change in prices, that briefly surged in September to 6.1 percent, steadily fell to 4.9 percent the following October and to only 4.1 percent in November.
Excess M3 breeds inflation as too much money in the system chases after too few goods, sending prices higher.
The headline inflation print of 4.1 percent in November proved the lowest since March last year and less than even the forecast rate of 4.3 percent by economists and market watchers.
