Eurozone money supply increases in August: ECB

FRANKFURT - Growth in eurozone money supply, a key indicator of demand in the economy, rose again in August, the European Central Bank said on Tuesday.

The M3 indicator rose 2.8 per cent last month, following a gain of 2.1 per cent in July.

The ECB had initially estimated the increase in July at 2.0 per cent and analysts polled by Dow Jones Newswires had also pencilled in a rise of 2.0 per cent again for August.

The ECB regards the M3 figure as a key guide to inflation pressures and uses it to set interest rates accordingly.

The central bank seeks to keep eurozone inflation below but close to 2.0 per cent but it stood at 2.5 per cent in August.

Meanwhile, the rate of growth in eurozone bank loans to the private sector also increased slightly in August, the ECB said.

Lending rose 2.6 per cent compared with the same month last year, up from 2.4 per cent in July.

The central bank held its benchmark interest rate steady at 1.50 per cent earlier this month and some ECB watchers predict it may even start lowering borrowing costs later this year to counter a sharp slowdown in the eurozone economy.