FINANCE ....

The BSP has so far hiked policy rates by a total of 450 basis points since May 2022 to tame the elevated inflation. This brought the benchmark policy rate to 6.5 percent.

"Inflation is on its way down. Assuming it continues to go down and within the range, then realistically, ang susunod dyan ay (what follows is) the lowering of the interest rates," he said.

Recto noted, however, that in terms of policy easing, the BSP may take its cue from the United States Federal Reserve.

"There’s a possibility na bumaba 'yan (it would go down). It all depends on what the US Fed does, as well. And then we look at our own data, too," he said.

Domestic liquidity slows in December

Meanwhile, bank lending of universal and commercial banks (U/KBs) maintained its growth rate in December last year while domestic liquidity grew at a slower rate.

Data released by the Bangko Sentral ng Pilipinas (BSP) late Thursday showed that U/KBs’ outstanding loans, excluding those placed in the central bank’s reverse repurchase facility, grew by 7 percent, the same rate of increase as in November 2023.

BSP data showed that outstanding loans issued by U/KBs amounted to PHP11.7 trillion from PHP10.9 trillion in December 2022.

Outstanding loans to residents went up by 7.3 percent in December from 7.4 percent in the previous month, while outstanding loans to non-residents decreased by 2.8 percent in December from a decline of 5.0 percent in November.

Loans for production activities went up by 5.5 percent from 5.7 percent in November.

The BSP said growth was driven largely by the expansion in lending to key industries, such as real estate activities, wholesale and retail trade, repair of motor vehicles and motorcycles, and electricity, gas, steam, and air-conditioning supply.

Consumer loans to residents also increased by 23.5 percent in December due to the increase in credit card loans, motor vehicle loans, and salary-based general-purpose consumption loans.

"Looking ahead, the BSP will ensure that liquidity and bank lending conditions remain in line with its price and financial stability objectives," the BSP said.

Meanwhile, domestic liquidity (M3) grew by 5.9 percent to PHP17.4 trillion in December 2023, slower than the 7 percent expansion in November 2023.

Domestic claims slowed to 9 percent in December from 9.7 percent in the previous month.

The BSP said claims in the private sector also grew by 8.5 percent from 8.3 percent "with the sustained expansion in bank lending to non-financial private corporations and households."

Net claims on the national government likewise rose by 14.2 percent, down from 17.3 percent a month earlier with the decline in the deposits of the national government with the BSP.

Net foreign assets (NFA) in peso terms rose by 4.3 percent in December from 3.2 percent in November.

The BSP said its NFA grew by 7.4 percent while the NFA of banks contracted on account of lower interbank loans receivable.

"Going forward, the BSP will continue to ensure that domestic liquidity conditions remain consistent with the prevailing stance of monetary policy, in keeping with its price and financial stability objectives," it said.