Euro area money supply growth slows in March

Money supply growth in the single currency bloc slowed in March.

According to the European Central Bank, the annual rate of growth in M3 money supply slowed from the 2.9% pace observed in February to 2.5%.

Economists had penciled-in growth of 2.4%.

Meanwhile, so-called 'narrow' money growth, which comprises currency in circulation and overnight deposits, shrank at a clip of 4.2% in March, down from 2.7% in February.

On the asset side of the equation, the rate of increase in credits to the private sector slowed from 3.3% to 2.8%.

Credit to general government slowed from 0.7% to 0.0%, those to households from 3.2% to 2.9% and those to non-financial corporations from 5.7% to 5.2%.

According to Melanie Debono at Pantheon Macroeconomics, the drop in M1 meant that the differential between slower nominal M1 growth and inflation continued to widen at the end of the first quarter - despite declining inflation.

The drop in M1 when adjusted for inflation also pointed to falls in the purchasing managers' surveys for the block in coming months.

"This hasn't happened yet but we think it will, soon."