Eurozone money supply increases in August: ECB

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Growth in eurozone money supply, a key indicator of demand in the economy, rose again in August, the European Central Bank said on Tuesday.

The M3 indicator rose 2.8 percent last month, following a gain of 2.1 percent in July.

The ECB had initially estimated the increase in July at 2.0 percent and analysts polled by Dow Jones Newswires had also pencilled in a rise of 2.0 percent again for August.

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 2.5 percent in August.

Meanwhile, the rate of growth in eurozone bank loans to the private sector also increased slightly in August, the ECB said.

Lending rose 2.6 percent compared with the same month last year, up from 2.4 percent in July.

The central bank held its benchmark interest rate steady at 1.50 percent earlier this month and some ECB watchers predict it may even start lowering borrowing costs later this year to counter a sharp slowdown in the eurozone economy.

© 2011 AFP

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