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October 01, 2022

Liquidity level steady in February

Liquidity in the system, a key determinant of inflation, proved steady in February when it grew at a readjusted rate of 8.5 percent.

According to the Bangko Sentral ng Pilipinas, this amounted to more or less P15.2 trillion money in circulation that is available to households and businesses during the month.

“Domestic claims increased by 8.8 percent year-on-year in February from 8.3 percent (revised) in the previous month due to the faster expansion in net claims on the central government as well as the sustained improvement in bank lending to the private sector. Net claims on the central government rose by 21.0 percent in February from 19.3 percent (revised) in January owing to the sustained borrowings by the National Government.

“Similarly, claims on the private sector increased by 4.9 percent in February from 4.3 percent (revised) in January as bank lending to non-financial private corporations rose,” the BSP reported on Thursday.

So-called net foreign assets (NFA) in peso terms increased by 6.5 percent in February from the revised 6.4 percent reported in January and a reflection of the increase in the gross international reserves (GIR) compared to a year ago.

The banks’ NFAs also grew but at a faster rate due to higher interbank loans receivable and deposits maintained in non-resident banks.

At this level, the BSP said the liquidity in the system should be sufficient to sustain continued economic expansion without the system overheating over the policy horizon.

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