European Money-Supply Growth Is Fastest in 17 Years - by Matthew Brockett
Money-supply growth in the euro region unexpectedly accelerated in December to the fastest pace in almost 17 years, increasing pressure on the European Central Bank to raise interest rates. M3 money supply, which the ECB uses as a gauge of future inflation, rose 9.7 percent from a year earlier after gaining an annual 9.3 percent in November, the central bank said today. That's the highest growth rate since February 1990, according to ECB records. Economists expected the rate to drop to 9.2 percent in December, the median of 35 forecasts in a Bloomberg News survey showed.
The ECB raised its benchmark rate for the sixth time in December, taking it to 3.5 percent from 2 percent a year earlier, to keep prices contained amid the fastest economic expansion since 2000. ECB executive board member Lorenzo Bini Smaghi said this week that further rate increases may be needed to guard against inflation caused by excessive borrowing.
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