The Bangko Sentral ng Pilipinas (BSP) has announced that August inflation is expected to settle within the range of 4.1 to 4.9 percent, based on preliminary data released on May 12, 2026. This projection comes alongside reports of faster bank lending and domestic liquidity expansion in March 2026, reflecting stronger economic activity and sustained demand from both businesses and households.
Bank Lending Growth Accelerates
Outstanding loans issued by universal and commercial banks grew by 10.7 percent year-on-year in March, accelerating from a revised 9.6 percent expansion in February. On a seasonally adjusted basis, bank lending rose by 1.7 percent month-on-month in March. The BSP noted that lending growth continued to support production activities and consumer spending across the economy.
Loans for business activities increased by 9.7 percent in March, up from 8.6 percent in February, driven by stronger lending to key sectors including real estate, electricity and utilities, wholesale and retail trade, and transportation and storage. Specifically, real estate loans grew by 8.8 percent, while lending to the electricity, gas, steam, and air-conditioning supply sector surged by 26.7 percent. Loans to wholesale and retail trade, including repair of motor vehicles and motorcycles, rose by 9.3 percent, and transportation and storage lending climbed by 19.4 percent.
Consumer Loans Remain Strong
Consumer loans to residents expanded by 20.5 percent in March, slightly slower than February's 20.8 percent growth due to softer demand for motor vehicle and salary-based consumption loans. Outstanding loans to residents increased by 11.1 percent from a revised 10.2 percent in February. Meanwhile, loans to non-residents declined by 5.9 percent, improving from the 13.2 percent contraction recorded in the previous month.
Domestic Liquidity Growth
Domestic liquidity, or M3, the broadest measure of money supply, grew by 12 percent year-on-year to P20.4 trillion in March, faster than the 10.3 percent increase in February. On a seasonally adjusted basis, M3 expanded by 1.7 percent month-on-month. M3 includes currency in circulation, bank deposits, and other financial assets readily convertible into cash.
The BSP attributed liquidity growth mainly to continued borrowing by non-financial private corporations and households. Claims on the private sector rose by 11.8 percent in March from 10.6 percent in February. Net claims on the central government also increased by 12.1 percent, supported largely by higher government securities issuances.
Foreign Assets and Money Supply Measures
Net foreign assets in peso terms rose by 8.6 percent year-on-year in March from a revised 7.5 percent in February. The BSP's net foreign asset position expanded by 4.9 percent, while banks' foreign asset holdings improved, mainly due to lower foreign currency-denominated bills. The narrower M1 money supply measure, which includes currency in circulation and current account deposits, grew by 9.4 percent in March, faster than the 8.5 percent increase in February.
The BSP said it continues to monitor lending and liquidity conditions closely, noting that bank loans remain a key transmission channel of monetary policy. "Looking ahead, the BSP will ensure that domestic liquidity and bank lending conditions remain aligned with its price and financial stability objectives," the central bank stated.
