Eurozone money supply increases in September: ECB

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Growth in eurozone money supply, a key indicator of demand in the economy, rose more sharply than expected in September, the European Central Bank said on Thursday.

The M3 indicator rose 3.1 percent last month, following a gain of 2.7 percent in August.

The ECB had initially estimated the increase in August at 2.8 percent and analysts polled by Dow Jones Newswires had also pencilled in a rise of 2.9 percent again for September.

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 accelerated to 3.0 percent in September.

Meanwhile, the rate of growth in eurozone bank loans to the private sector was unchanged at 2.5 percent in September, the ECB said.

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

© 2011 AFP

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