September 26, 2003	Friday	Rajab 28, 1424

FRANKFURT, Sept 25: Growth of the euro-zone money supply, which the European Central Bank views as a key indicator of future inflation, slowed in August, data showed on Thursday.

The ECB calculated that M3 money supply grew by 8.2pc on a 12-month basis in August, noticeably slower than the growth rate of 8.6pc recorded in July.

Analysts had been pencilling in growth of 8.3 per cent for August.

M3 covers cash, overnight deposits, other short-term deposits, repurchase agreements, shares and units in money market funds and debt securities with a maturity of up to two years.

The guardian of the euro closely monitors developments in the money supply when deciding the appropriate level of interest rates because it sees a link between the level of liquidity in the economy and future inflation.

Because the monthly M3 figures are subject to volatility, the ECB also calculates a three-month moving average for M3 growth, and that stood at 8.4 per cent in the period from June to August, fractionally slower than the rate of 8.5 per cent in the period from May to July.

A closer look at the latest M3 data showed that growth of loans to the private sector — which the ECB monitors closely for its inflationary implications — picked up fractionally to 5pc in August from 4.9 per cent in July.—AFP