February sa M3: +2.8% y/y
M3 sa 3-mo avg: +2.3% y/y
SA private loans: +0.7% y/y

MNI survey median:
February sa M3: +2.3% y/y
M3 sa 3-mo avg: +2.2% y/y
SA private loans: +1.1% y/y

MNI survey range:
January sa M3: +1.7% to +2.7% y/y
M3 sa 3-mo avg: +2.1% to +2.3% y/y
SA private loans: +1.1% to +1.3% y/y

January sa M3: +2.5% y/y
M3 sa 3-mo avg: +2.0% y/y
SA private loans: +1.1% y/y
—

FRANKFURT (MNI) – Eurozone private sector lending unexpectedly
slowed in February to its weakest annual rate since June 2010, while
money supply growth surprised to the upside, the European Central Bank
reported on Wednesday.

After a modest acceleration in January, annual loan growth slowed
to +0.7%, dampening overall credit growth to the private sector by half
to +0.3%. Adjusting for sales and securitisation, loans were up 1.1% on
the year in February after +1.5% in January.

Credit granted to households rose 1.2% on the year after +1.3% in
January. with mortgage loans, the most important component of consumer
borrowing, steady at +1.8%.

Loans to non-financial corporations slowed more sharply to +0.4% in
February, down 0.3 percentage point compared to January.

Annual M3 money supply growth jumped to a five-month high of +2.8%
in February, surpassing all forecasts to lift the three-month moving
average to +2.3%. Nevertheless, the rate remains well below the ECB’s
target of +4.5%.

Among the components of M3, M1 narrow money rose 2.5% on the year,
while the annual growth rate of short-term deposits other than overnight
deposits picked up to +3.1%. Conversely, marketable instruments slowed
to an annual growth rate of 3.1%.

In its latest monthly bulletin, the ECB estimated that it would
take several months for the full impact of its two longer-term
refinancing operations to show up in monetary data. “Thus, money and
credit growth may remain subdued for some time before strengthening as a
result of these three-year LTROs,” the ECB said.

Still, comments from a number of board members indicate that the E1
trillion in ECB funds is already having an effect.

“At present, we are seeing some encouraging, albeit early, signs of
normalization across financial market segments,” ECB Executive Board
member Benoit Coeure said at a conference over the weekend.

ECB Board member Peter Praet stressed in a recent interview that
the central bank’s non-standard measures were not feeding into consumer
price developments.

But the ECB remains “very vigilant,” Praet said, adding that,
should inflation risks emerge, the central bank has the necessary
instruments to act.

–Frankfurt newsroom +49 69 720 142; e-mail:frankfurt@marketnews.com

[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$,MTABLE]