February sa M3: +2.0% y/y
M3 sa 3-mo avg: +1.7% y/y
SA private loans: +2.6% y/y

MNI survey median:
February sa M3: +1.8% y/y
M3 sa 3-mo avg: +1.7% y/y
SA private loans: +2.5% y/y

MNI survey range:
February sa M3: +1.6% to +2.0% y/y
M3 sa 3-mo avg: +1.6% to +1.7% y/y
SA private loans: +2.4% to +2.6% y/y

January sa M3: +1.5% y/y
M3 sa 3-mo avg: +1.7% y/y
SA private loans: +2.4% y/y

—

PARIS (MNI) – Eurozone M3 money supply growth recovered more than
generally expected in February and lending to the private grew slightly
faster than most analysts had forecast, seasonally adjusted data from
the European Central Bank showed Friday.

After slowing to 1.5% in January due mainly to a contraction in
interbank transactions, annual growth of M3 accelerated to 2.0% in
February.

Remaining well below the ECB’s reference value of 4.5%, such growth
rates, in the central bank’s words, point to “contained inflation
pressures over the medium to longer term.”

But Governing Council members are clearly paying more attention
these days to the rapid rise in commodity prices, fearing that as
economic growth gains traction, producers will be able to pass on more
of their higher input costs, prompting employees to seek compensating
pay increases. Hence, the need for pre-emptive monetary tightening.

Moreover, there are still large amounts of monetary liquidity built
up before the crisis that could accentuate mounting price pressures at
the global level, the ECB argues.

Within M3, annual M1 growth slowed to 2.9% from 3.2% in January.
Short-term deposits other than overnight deposits increased 1.8% on the
year after a 1.1% rise in January. Marketable instruments were down 0.4%
on the year after -4.0% in January.

Among the main counterparts of M3, annual growth of total credit
granted to euro area residents was steady at 3.8% in February. Growth of
credit to governments remained brisk at 10.5% after +11.7%, largely
reflecting transfers to the German government’s “bad bank”.

Annual growth of credit to the private sector accelerated to 2.3%
in February from 2.1% in January. Growth of loans to the private sector
increased more than most analysts expected to 2.6% in February from 2.4%
in January. (Adjusted for loan sales and securitisation, the annual rise
accelerated to 3.0% from 2.7%.)

Loans to non-financial corporations were up 0.6% year after a 0.5%
rise in January. On the month, loans were up E16 billion after a E18
billion rebound in January.

Annual growth of loans to households eased to 3.0% from 3.1%.
Growth of lending for house purchases remained the most dynamic, rising
3.8% on the year after +3.9% in January, reflecting the recovery of the
housing markets in a number of countries. Consumer credit declined by
0.9% in February after -1.0% in January, perhaps due to slowing new car
purchases.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$]