Euro money supply growth eases
Wednesday, 30 March 2005Money supply growth in the euro zone slowed slightly in February, according to figures from the European Central Bank this morning.
M3 grew at an annual rate of 6.4% last month, compared with 6.6% in January, but the three-month growth rate accelerated from 6.3% in November-January to 6.5% in December-February.
M3 is a broad measure of money supply which includes not only notes and coins, but also deposits, money market funds and short-term repurchase agreements.
The ECB watches the M3 figure as it sees a link between money supply and inflation. The ECB calculates that the money supply needs to grow at around 4.5% each year to serve as a basis for non-inflationary economic growth. But the M3 figure has been growing much faster than that for a long time.
