Eurozone money supply growth hits slowest pace since pre-QE

Posted on November 28, 2016

Money supply in the eurozone grew at its softest pace since the European Central Bank began its bond-buying programme last month, with the central bank likely poised to extend its stimulus measures next week.

A measure of broad money, known as M3, expanded by 4.4 per cent in October, coming in lower than the 5 per cent forecast by economists and the slowest pace of growth since February 2015.

Usually seen as a forward indicator for economic activity, the money supply figures were coupled with a moderate rise in lending to households, which grew by 1.8 per cent – in line with expectations and unchanged from September.

Credit growth for businesses inched up by 2.1 per cent on a month on month basis, from 2 per cent in the previous month, according to figures from the ECB.

Eurozone policymakers are widely expected to announce a six-month extension to their quantitative easing measures first launched back in March 2015, and which could last until September 2017.

The meeting will be held on December 8 and comes after the ECB has already snapped €1.1tn of government bonds under the scheme.

President Mario Draghi is due to be quizzed on QE and the fallout from the UK’s Brexit vote when he addresses MEPs in the European Parliament later today (1400 GMT).

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