I am often asked the questions – Is the BSP not worried about strong liquidity growth, which tipped 30 percent in August and September? Is the BSP not concerned with credit growth, which has been growing at double digit for over a year now? Does the BSP see an asset bubble? Let me consider each briefly.
On liquidity growth – The uptick in liquidity growth will only be for a short transition period, as banks adjust to operational refinements to the access to the BSP’s SDA facility. With banks rebalancing portfolios to take these changes into consideration, banks could be expected to more expeditiously and effectively channel the SDA funds to the productive sectors.