The Bangko Sentral ng Pilipinas mopped up P489 billion of excess fund in October, more than seven times the P78 billion level last year.

By paying good rates for the banks’ money, the BSP was able to control money supply growth and help rein in inflation.

The October level was also an increase from P468 billion in September.

The placements rose despite the 25-basis-point cut in the central bank key rate to 5.75 percent during the month.

The SDAs, the access to which was widened in May last year, pay a premium over the overnight borrowing rate for tenors of from two weeks to six months.

Central bank officials said the monetary tool would remain in place as it remains effective in controlling liquidity, the growth of which has been tempered continuously since May to 11.4 percent in October.

The Bangko Sentral ng Pilipinas has by four times reduced its key rate last year, bringing it to 5.25 percent in end-December, helped by the moderation in money supply growth.

Including the interest expense on the SDAs, the BSP had a net gain of P21.8 billion from its operations through October last year. Foreign-exchange losses, however, erased the gains and reversed the BSP to a P45.6-billion net loss for the period.

Monetary officials expect to end 2007 with an inflation of between 2.7-3.1 percent, below the target of 4-5 percent. The rate was at an average of 2.7 percent through November.