Manila – Money supply growth in the Philippines slowed to 23 percent on year to 7.1 trillion pesos ( 163.51 billion U.S. dollars) in June, the local central bank said Thursday.

Domestic liquidity or M3 growth in June was lower than the 28.4 percent expansion recorded in May. M3 refers to the amount of money circulating in the economy.

The Bangko Sentral ng Pilipinas (BSP or Philippine central bank) said the increase in M3 in June was due largely to the sustained demand for credit in the domestic economy. Domestic claims rose at a stronger pace of 13 percent during the period, reflecting the steady uptrend in lending to the private sector.

The bulk of bank loans during the month was channeled to real estate, renting, and business services; utilities; wholesale and retail trade; manufacturing; and the agriculture sector.

The BSP said M3 is expected to ease in the coming months to also show “base effects” from last year, when the rate of increases started going up.

“(Previous policy moves) implemented earlier are expected to help bring domestic liquidity growth in line with levels consistent with the pace of expansion of the real sector,” the BSP said in a statement.

The central bank still considers the growth in liquidity as ” elevated.” These high growth rates were a result of the exit of cash from the BSP’s Special Deposit Account facility last year. This followed a ban imposed on the access of non-pooled funds to the facility. Source: Xinhua