Continued expansion in domestic liquidity threatens to push past the double-digit line in March, averaging 9.4 percent, or P7.7 trillion, from only 8.5 percent in February, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
But the acceleration failed to unsettle the monetary authorities who said domestic-liquidity expansion, known as M3 among technocrats, should remain in single digit this year.
While this was faster than the 8.5-percent acceleration in February, such was also significantly tamer than M3 growth averaging 35.3 percent in March last year.
Continued M3 growth is beneficial for an expanding economy like the Philippines, as this helps ensure the productive sectors have the fuel they need to push the economy forward.
The BSP remains confident the continued domestic-liquidity expansion is in lockstep with projected local output, measured as the gross domestic product, averaging 7 percent to 8 percent this year.
“The continued expansion in domestic liquidity during the month indicates sufficient liquidity to sustain the economy’s growth momentum,” the central bank said in a statement.
The monetary authorities traced the continued acceleration of domestic liquidity to fewer placements by trust entities in the BSP’s special deposit accounts (SDA) window compared to the previous month.
The deceleration of domestic liquidity growth in March 2015, when compared to the double-digit growth in the same month last year, is a reflection of the so-called statistical base impact associated with the significant increase in M3 last year, the BSP said.
Latest data show SDA deposits now down to only P985 billion in April, compared to its peak of about P2 trillion before the operational adjustments the BSP adopted in 2013.
Money supply continued to expand also because of sustained demand for credit during the period, according to the BSP.