Euro zone money supply up in September

Euro zone M3 money supply annual growth rose to 7.6 per cent in September, the European Central Bank (ECB) said today.

Euro zone M3 money supply annual growth rose to 7.6 per cent in September, the European Central Bank (ECB) said today.

It said reactions to last month's attacks on US cities may have distorted the data.

The seasonally adjusted increase in the ECB's key inflation barometer exceeded the consensus forecast of economists who predicted annual M3 growth would accelerate to 7.1 per cent in September from 6.7 per cent in August.

The ECB left its key lending rate at 3.75 per cent yesterday, defying calls from politicians and economists for a cut to invigorate the flagging euro zone economy.

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But market participants do not expect the data to deter it from lowering its key lending rate over the next few months.

The bank itself highlighted special factors behind the recent jump.

The particularly strong rise in M3 in September can be associated with a pronounced preference of investors for liquidity positions as a reaction to the increased uncertainty following the terrorist attacks in the US on September 11th, the ECB said.

The ECB views money supply as a reliable guide for long-term inflation, but it has noted distortions make the headline figure less reliable as a measure of price pressure.