ASEAN KEY DESTINATIONS
Philippine central bank sees money supply rising 13-14%
Philippine money supply growth is expected to hit 13 to 14 percent this year, aided by interest rate cuts and continued growth in remittances from Filipinos working overseas, Reuters quoted a senior central bank official as saying.
Latest available data from the central bank showed money supply, or M3, rose 14.6 percent in November from a year earlier, outpacing the 13.1 percent clip in the previous month.
"M3 growth would be in the vicinity of 13 to 14 percent," central bank deputy governor Diwa Guinigundo told reporters at the weekend when asked about the outlook for liquidity this year.
The forecast is slightly higher than the 11 to 13 percent growth estimate made by central bank governor Amando Tetangco in December.
The central bank has lowered its key interest rates by a total 100 basis points in the past two months, and analysts expect more cuts as inflation continues to ease in line with the rest of Asia.
Annual inflation hit a 10-month low of 7.1 percent in January amid falling prices for oil and other commodities, supporting analysts' view that the central bank's key overnight borrowing rate could drop to as low as 4.0 percent this year from 5.0 percent at present.
Guinigundo is also optimistic that remittances of Filipinos working overseas, a major driver of consumer spending, will continue to grow this year even as companies around the world shed jobs to survive the worsening economic downturn.
"It's difficult to think that the double-digit growth in deployment of Filipinos overseas in 2008 would just dissipate in terms of the corresponding remittances in 2009," he said, adding the contracts of these workers normally range between two to three years.
About a tenth of the Philippines' 90 million people work and live abroad and send money to support their families and relatives at home.
Money supply is one of many indicators the central bank looks at when reviewing monetary policy. The next policy meeting is on March 5.