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Domestic liquidity growth slows to 11.9% in Nov ’05 |
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By Des Ferriols
The Philippine Star 01/09/2006 The demand for money eased in the late months of 2005 as the National Government slowed down on its domestic borrowing, bolstering the possibility that the Bangko Sentral ng Pilipinas (BSP) would keep its policy rates steady in the absence of inflationary pressure. The BSP reported over the weekend that domestic liquidity growth eased to 11.9 percent in November last year from a 14.1-percent expansion recorded in October. The BSP said the growth in domestic liquidity slowed down mainly due to the 5.5 percent decline in net lending to the National Government which led to a drop in overall credit to the public sector. According to the BSP, the growth that did occur in November was driven by strong inflows of foreign exchange from overseas Filipino workers as well as portfolio and direct investments. BSP Governor Amando M. Tetangco Jr. told reporters that these inflows contributed to the continued increase in the net foreign assets of both the BSP and the depository corporations as well as the continued expansion in demand and time deposits in the financial system. With the demand for money easing up and inflationary pressures also on the way down, the BSP is not likely to touch its policy rates when the Monetary Board meets for the first time this year on Thursday. Despite the increase in consumer spending during the holiday season, the year-on-year headline inflation rate in December decelerated to 6.6 percent from 7.1 percent in November. The National Statistics Office (NSO) reported recently that the December inflation brought the whole-year inflation rate to 7.6 percent, hitting the high-end of the projected rate of the Bangko Sentral ng Pilipinas (BSP). The whole-year 2005 headline inflation is higher by 1.6 percentage points than six percent in 2004, the NSO said. According to the NSO, the slower annual inflation rates posted in the indices of all the commodity groups except for housing and repairs (H&R) and fuel, light and water (FLW) brought about the downtrend. Excluding selected food and energy items, core inflation eased to 5.8 percent in December from 6.1 percent in November. The average annual core inflation rate was higher by 1.3 percentage points to 7.0 percent in 2005 from 5.7 percent in 2004. Tetangco said the December inflation was in line with the expected moderation in price surges, dampened largely by increased purchasing power fueled by the appreciation of the peso against the dollar resulting from record-high remittances from overseas Filipino workers. |
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