The euro-zone money supply, which the European Central Bank watches closely when setting interest rates, accelerated unexpectedly in March, data showed today, further dampening any expectations for an imminent cut in European interest rates.
Area-wide money supply, as measured by the broad indicator M3, expanded by 5 per cent on a 12-month basis in March, faster than the 4.7 per cent recorded in February, the ECB said.
Analysts had been expecting M3 growth to slow to 4.4 per cent in March.
M3 covers cash, overnight deposits, other short-term deposits, repurchase agreements, shares and units in money market funds and debt securities with a maturity of up to two years and is the ECB's preferred indicator of medium-term inflationary trends.
The bank has set a target of 4.5 per cent for M3 growth this year, but growth has so far consistently overshot that target.
The Maastricht Treaty states that the essential objective of the ECB is to maintain price stability, and ECB officials have made clear for many months that they are worried about inflationary pressures in the euro zone.
The ECB has come under pressure from some euro-zone politicians, and from the IMF, recently to cut interest rates to counter a slowing of activity, the latest example being an interview by former French president Mr Valery Giscard d'Estaing today.
He told the Belgian newspaper Le Soirthat the ECB was taking a "serious risk" in holding its rates steady.
AFP