FX.co ★ Eurozone M3 Growth Improves; Private Sector Credit Rises At Faster Pace

The European Central Bank recently reported that the Eurozone's money supply experienced an accelerated growth, with an increase in private sector credit growth. The generalized monetary aggregate, M3, recorded an annual upswing of 0.4%, registering a significant increase from the 0.1% rise seen in January. This growth, marking the third consecutive increase, is also the fastest on record since June of the previous year.

The data illustrated an increase in the annual growth rate of credit to the private sector, rising to 0.7% in February from January's 0.4%. Similarly, adjusted loans to the private sector exhibited an annual growth of 0.7%, indicating a rise from January's 0.4%.

Breaking down credit growth by sectors, adjusted loans to households remained stable with an annual growth rate of 0.3% in February. At the same time, loans to non-financial corporations saw a growth rate that doubled to 0.4% from 0.2%.

Reflecting on the current lending rate, ING economist Bert Colijn suggested that investment is likely to remain somber. Capital Economics' economist Jack Allen-Reynolds, however, predicted that the expected interest rate cuts later in the year may facilitate a gradual rebound in net lending growth, despite an expected slow recovery.