Eurozone M3 money supply growth slowed to 8.8% y/y in August. July data were revised down to 9.1% from 9.3% reported initially. The 3-months moving average, the ECB's preferred target, slowed to 9.2% from 9.6% in the three months to July. At the same time the annual rate of growth of loans to the private sector decreased to 8.8% in August from 9.4% in the previous month. Data are lower than anticipated and the renewed decline in both M3 as well as loan growth suggests that inflation pressures from the monetary side are slowly receding. However, at 9.2% the 3 months rate remains far above the reference value of 4.5%. Equally, at 8.8% the rate of loans to the private sector is robust, with not sign of a credit crunch. So data may point to increased room for rate cuts ahead, but are unlikely to prompt an immediate change of heart at the central bank. Bond futures continued their decline after the release. Meanwhile, the euro-dollar (EURUSD) has recently dipped to hit an intraday low of 1.4695, but has bounced back to hold around 1.4710.
Al Bawaba
