Date registered: Feb 2006
Vehicle: 1999 ML320
Mentioned: 1 Post(s)
Quoted: 310 Post(s)
Is the EU economy *really* this sound ?
From this article, private sector credit is still excellent.
And how does 10+% money growth contribute to
price stability , Mr Trichet ?!?
``The current monetary-policy stance will contribute to achieving our price-stability objective,'ECB President Jean- Claude Trichet
European February Money-Supply Growth Slows to 11.3% (Update2)
By Christian Vits
March 31 (Bloomberg) -- Money-supply growth in the 15-nation euro region unexpectedly slowed in February.
M3 money supply, which the European Central Bank uses as a gauge of future inflation, rose 11.3 percent from a year earlier after gaining 11.5 percent in January, the Frankfurt-based central bank said today. Economists expected the rate to remain unchanged, the median of 32 forecasts in a Bloomberg News survey showed.
With inflation in the euro region running at the fastest pace in almost 16 years, ECB policy makers have refrained from following the U.S. Federal Reserve in cutting interest rates to shore up economic growth. While a housing slump is threatening to drag the U.S. economy into recession, latest data suggest Europe's will keep growing.
``While money-supply growth eased somewhat, the dynamic is still relatively high,'' said Michael Schubert, an economist at Commerzbank AG in Frankfurt. ``The ECB will remain concerned, not only about money-supply but in particular about elevated inflation rates.''
Inflation accelerated to 3.5 percent in March from 3.3 percent in February, the European Union's statistics office in Luxembourg said today. The ECB aims to keep the rate just below 2 percent.
Investors reduced bets that the ECB will cut rates this year after business confidence in Germany and France unexpectedly rose in March. The yield on the Euribor interest-rate futures contract maturing in December stood at 3.97 percent today, up from 3.31 percent on Feb. 11.
M3 is the broadest gauge of money supply and includes cash- in-circulation, some forms of savings and money-market holdings. The M3 growth rate has exceeded 4.5 percent, the level the ECB still deems non-inflationary, every month since May 2001.
The three-month average of the annual M3 growth rate through February fell to 11.4 percent from 11.7 percent in the three months through January.
Growth in M1, a measure of cash and short-term deposits, decelerated to 3.7 percent last month from 4.3 percent in January. The annual rate of loan growth to the private sector fell to 10.9 percent in February from 11.1 percent.
``Private sector credit lending still is extremely strong,'' said Marco Kramer, co-head of European economics at UniCredit Markets & Investment Banking in Munich. ``Certainly this is a thorn in the ECB's side and a reason -- besides high inflation and the sentiment data -- why the bank isn't following the Fed.''
By contrast, the ECB on March 6 kept its benchmark interest rate at a six-year high of 4 percent, highlighting ``upside risks'' to price stability.
``The current monetary-policy stance will contribute to achieving our price-stability objective,'' ECB President Jean- Claude Trichet told European lawmakers in Brussels last week. ``In the Governing Council's view, the risks to the medium-term outlook for inflation are on the upside.''
The ECB expects inflation in the euro region to average 2.9 percent this year, according to its March projection. Growth is forecast to slow to about 1.7 percent in 2008 from 2.6 percent last year.
Still, the euro area's economic fundamentals ``are sound,'' Trichet said March 26, suggesting he sees no immediate need for rate cuts. While Trichet conceded that ``uncertainty about the prospects for economic growth remains unusually high,'' he stressed the ECB remains ``inflexibly attached'' to its price- stability mandate.