ABS-CBN News Online Beta

BSP says March money supply up 15.6%

Reuters | 05/08/2009 9:44 PM

Printer-friendly version | Send to friend | Share your views

Philippine money supply in March climbed 15.6 percent from a year ago, faster than a 14.6 percent annual rise in February, but the expansion does not create any worries about inflation, the central bank said on Friday.

The central bank has reduced policy rates by a total 1.5 percentage points since December as slowing inflation allowed policymakers to focus on boosting economic growth to combat the global dowturn.

Money supply is one of many indicators the central bank looks at when setting policy rates because of its impact on consumer prices.

"In fact, ample liquidity has provided fundamental support to the economy's growth requirements amidst difficult global economic conditions," Central bank governor Amando Tetangco said said in a statement.

Money supply or M3, the broader measure of money circulating in the Philippine economy, was 3.53 trillion pesos ($74.5 billion) at the end of March compared with 3.05 trillion pesos a year earlier, the central bank data said.

Inflation in March eased to 6.4 percent from a year earlier and slowed further to 4.8 percent in April, a 16-month low, as prices of nearly all commoditiues fell.

Officials said earlier this week annual inflation may slow to under 1 percent in June and come in at zero in either July or August, supporting the case for more rate cuts.

The central bank will next review its key policy rates, currently at a 17-year low of 4.5 percent for overnight borrowing, on May 28, the same day first-quarter economic data is released.
Tetangco said earlier this month he did not see the need to inject more money to the financial system since banks are awash with cash, signalling the central bank may be nearing the end of its current easing cycle.

Separately, the central bank said Philippine banks' outstanding loans grew 18.9 percent in March from a year earlier, slower than the 22.5 percent rise in February.

Excluding the reverse repurchase agreements with the central bank, bank lending grew 17.8 percent in March, down from 22.6 percent in February.

Lending to consumers, including credit cards, grew 9 percent in March, slower from the previous month's 15.2 percent. But loans for production activities, such as agriculture, real estate, and the power sectors, rose 16.8 percent from 20 percent in February.