According to data the ECB published on 27 October, annual growth of the broad monetary aggregate M3 in the euro area held at 3.5% in September. Growth of narrow M1, which includes currency and overnight deposits, eased to 2.7% from 2.9%. Adjusted loans to households grew at 3.1% and to non-financial corporations at 4.2%, both unchanged from August. Corporate deposits accelerated to 5.3% from 4.7%, while household deposits slowed to 2.3%.
What it means: Monetary data are among the figures the ECB Governing Council looks at before its 29 October meeting, where it will decide on interest rates, with the deposit facility rate currently at 2.50%. The September picture is stability: credit growth to businesses and households continues at the same pace, with no sign of overheating or a sharp slowdown. The slowdown in M1 shows some money moving from overnight deposits to time deposits or other interest-bearing products. Faster growth in corporate deposits may mean firms are holding more cash, whether from better cash flow or caution in the face of uncertainty. For Greek businesses, steady lending growth in the euro area means financing conditions are not changing abruptly, though in Greece rates and access to credit also depend on conditions in the domestic banking system. Firms planning bank-financed investment have a relatively predictable environment, while those with significant cash should consider how they split it between overnight accounts and time deposits.
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