Eurozone money supply growth slows in October: ECB

28th November 2011, Comments 0 comments

Growth in eurozone money supply, a key indicator of demand in the economy, slowed unexpectedly in October, the European Central Bank said on Monday.

The M3 indicator rose 2.6 percent last month, following a gain of 3.0 percent in September.

The ECB had initially estimated the increase in September at 3.1 percent and analysts polled by Dow Jones Newswires had pencilled in a pick-up in the growth rate for October to 3.5 percent.

The ECB regards the M3 figure as a key guide to inflation pressures and uses it to set interest rates accordingly.

The central bank seeks to keep eurozone inflation below but close to 2.0 percent but it stood at 3.0 percent in October.

Meanwhile, the rate of growth in eurozone bank loans to the private sector increased to 2.7 percent in October from 2.5 percent in September, the ECB said.

The central bank cut its benchmark interest rate by a quarter of a percentage point to 1.25 percent earlier this month in a surprise move, arguing that future inflation is likely to slow as the eurozone debt crisis puts the brakes on economic growth in the single currency area.

© 2011 AFP

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