Friday April 25, 2008 - 13:39:41 GMT
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CEP News - www.economicnews.ca
Euro Zone M3 Money Supply Growth Rate Eases in March to 10.3%
08:13 04/25 (CEP News) Frankfurt - According to data from the
European Central Bank, M3 money supply grew 10.3% on an annual basis in
March, down from the previous monthâ€™s rise of 11.3% and lower than the
consensus estimate of a 10.6% growth rate.
three-month average growth rate came in higher than expected, having
increased by 11.1% in March. Economists had been expecting a rise of
11.0%, following the 11.5% increase in the previous month. Februaryâ€™s
3-month average was revised up from 11.4%.
â€śRegarding the steep deceleration in the M3 headline, it is mainly due
to a favourable base effect,â€ť IDEAglobal economist Lorenzo Cella said
in a research note.
â€śIndeed, according to our calculation, the base effect accounts for broadly 70% of the reported decline in March,â€ť he noted.
â€śLooking ahead, we are likely to witness a steep acceleration in the M3
annual growth in April, once again due to a base effect, which should
bring the M3 annual growth back to its recent levels of around
10.4%-10.8%,â€ť Cella concluded.
Ben May, an economist at Capital Economics, said Marchâ€™s slowdown in
annual euro-zone M3 growth might help to ease some of the ECBâ€™s
concerns regarding the inflation outlook.
Noting that the annual growth rate of loans to the private sector fell
only slightly to 10.8% in March, May stated that this finding appeared
to be inconsistent with the ECB's suggestion of tightening credit
conditions, as mentioned in their recent Bank Lending Survey.
However, May proposed that â€śbanks may be bringing forward borrowing in
anticipation that credit may be harder to come by in the months ahead.â€ť
"As such, the recent strength of bank lending to firms may not be quite
as encouraging as it looks," he said. â€śBut at least for the time being,
bank loans do not seem to be in short supply."
Within 15 minutes of the M3 data release, the euro fell from 1.5592 USD
to $1.5556. However, it should be noted that the euro had been under
pressure from the day before.
While the Bund showed little reaction, the yield on the Schatz rose from 3.902% to 3.919%.
European traders will be watching closely as German preliminary CPI and HICP data is expected to be released on April 28.
By Todd Wailoo, [email protected], edited by Stephen Huebl, [email protected]
(END) Â©CEP Newswires - Â©CEP News Ltd. 2008. All Rights Reserved. www.economicnews.ca
Related recent stories: (08:10 04/25) Spanish Government Revises 2008 GDP Forecast Down to 2.3% (07:40 04/25) Statistics Can't Change Public's Inflation Perceptions, Says ECB's Gonzalez-Paramo (07:04 04/25) Spanish Unemployment Rises to 9.63% in First Quarter (Update)
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