Brussels, 29/08/2001 (Agence Europe) - The rise in the annual slide of the M3 money supply (advanced inflation indicator) in the euro zone increased to 6.4% in July, against 6.1% a month earlier, the European Central Bank (ECB) announced on Tuesday. Confirmation of the recent rise of the M3 indicator (concerning cash, current accounts and short-term investments) is an argument that the ECB Governing Council, meeting on Thursday, may use to justify maintaining the key rate, despite the decrease in the rate of inflation that has begun and a slowdown in the European economy.
This figure is higher than analysts expected, who were counting on average on an annual slide of 6.1 or 6.2%. The average of M3 annual growth rates covering the period May-July, considered as the most reliable by the ECB, is 5.9% against 5.3% for the period April-June, here too more than analysts expected in their consensus (5.8). In both cases, the rate of the rise of the M3, an advanced inflation indicator, remains clearly higher than the reference value (4.5%) (set by the issuance institute of Frankfurt) considered as maximum tolerated. In addition, the increase in credits granted to the private sector again slowed-down slightly, at 8.2%, against 8.4% in June.
In a press release, the ECB nevertheless chose to play down the rise in the money supply in July. It pointed out that the rise doubtless reflected "the recent weakness of the stock markets" which tended to make investors seek refuge into low-risk short term paper. The issuance institute also reaffirmed that the M3 figures were affected by a distortion linked to the unjustified inclusion, in the statistics, of certain monetary assets held by non-residents of the euro zone. It stressed that this distortion should reach 0.75 percentage points. This would thus reduce the scale of M3 growth in July to 5.65% and the quarterly average to 5.15%. A level however still much higher than the ECB's reference value.