posted slower price increases during the year. likewise, non - food inflation also fell in 2019 due largely to easing energy prices. the pursuit of prudent and well - calibrated monetary policy by the bsp continues to support favorable inflation dynamics in the country. in 2019, as a pre - emptive move against the risks associated with lingering sluggish global growth, the monetary board ( mb ) decided to reduce the policy rate by 25 bps in may, august, and september 2019, respectively. and in its most recent monetary policy stance meeting on 6 february 2020, the mb cut the policy rate by another 25bps. the board was of the view that a tame inflation environment, there is a room for a further preemptive reduction in the policy rate to support market confidence. the mb 1 / 5 bis central bankers'speeches noted the possible adverse impact of the spread of the 2019 novel coronavirus on global market sentiment as well as on domestic economic activity in the coming months. latest baseline forecasts indicate a target - consistent path of inflation for 2020 and 2021, with average inflation remaining within the target range of 3. 0 percent ± 1. 0 percentage point. the balance of risks to the inflation outlook continue to tilt slightly toward the downside in 2020 and in 2021. forecasts by other institutions generally convey similar expectations. capital economics forecasts 2. 8 percent inflation for 2020 ; oxford economics, 2. 9 percent ; asian development bank, 3. 0 percent ; and imf, 2. 6 percent. we have also seen continued improvement in the growth of both domestic liquidity and credit activities in line with the needs of the economy. latest data show that domestic liquidity ( m3 ) expanded by 11. 4 percent year - on - year to about ₱13. 0 trillion in december 2019, faster than the 9. 8 - percent growth in november. demand for credit remained the principal driver of money supply growth. on the other hand, preliminary data show that outstanding loans of universal and commercial banks, net of reverse repurchase ( rrp ) placements with the bsp, grew by 10. 9 percent in december, faster than the 10. 1 - percent expansion in the previous month. loans for production activities — which comprised 87. 4 percent of banks ’ aggregate loan portfolio, net of rrps — expanded at a rate of 9. 1 percent in december, higher than the reported growth in november at 8. 1 percent. these loans continued to be driven

the global environment which continue to dampen investor sentiment, both externally and domestically. fx inflows from of remittances as well as bpo earnings continue to contribute significantly to the country ’ s gir. cash remittances reached us $ 30. 1 billion in 2019 while bpo revenues were recorded at us $ 16. 4 billion for the first three quarters of 2019. preliminary data as of end - january 2020 shows that the country ’ s gross international reserves ( gir ) stood at us $ 86. 4 billion, which provides an ample external liquidity buffer that is equivalent to 7. 6 months ’ worth of imports of goods and services and payment of primary income. this is way above the traditional 3 month - import cover. we will continue to monitor recent developments that could pose as risks to these inflows ( tourism, remittances, exports ), such as the lingering weak external demand, the impact of corona virus outbreak in china and the continued uncertainty surrounding the trade deal between the us and china, among others. the sustained build - up of the country ’ s foreign exchange reserves continues to lend strong support for the stability of the philippine peso. the current movement of the peso reflects a confluence of factors from both the external and domestic environment. we continue to adopt a market - determined exchange rate which allows the value of the philippine peso to move along with the demand for and supply of foreign exchange in the economy. nevertheless, the we are ready to act to prevent excessive peso volatility and overshooting due to speculative activities. fitch ratings recent revision of the philippine ’ s outlook from stable to positive, r & i ’ s upgrade of the philippines ’ credit rating from “ bbb ” to “ bbb + ”, the bsp ’ s decision to cut policy rates by 25 bps as well as reports of an all - time high remittances and tourism in the philippines in 2019 provided a calm ground for country ’ s financial markets.. the equities market continues to perform strongly in the second month of 2020 as the psei continued to trade above the 7, 100 benchmark, hitting a peak of 7, 507. 20 index pts. on 11 february before closing at 7, 413. 0 pts on 20 february 2020. meanwhile, the bond market, as of 19 february 2020, the emerging market bond index global ( embig ) philippines spread, stood narrower at 68 bps from the