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Eurozone M3 Growth Accelerates; Private Sector Credit Growth Rises

Eurozone money supply grew at a faster pace in April and credit to the private sector growth accelerated further, data published by the European Central Bank showed Friday.

The broad monetary aggregate M3 expanded 8.3 percent year-on-year in April, faster than the 7.5 percent increase seen in March.

Likewise, growth in narrow measure, M1, improved to 11.9 percent from 10.4 percent in March.

Data showed that credit to the private sector increased 4.4 percent after rising 4.2 percent in the previous month. At the same time, growth in adjusted loans to the private sector slowed marginally to 4.9 percent from 5 percent.

Loans to households grew at slower pace of 3 percent, while loans to non-financial corporations rose at a faster rate of 6.6 percent.

Bank lending to firms jumped again in April, suggesting that government loan guarantees and cheap ECB funding for banks are having the desired effects, Jack Allen-Reynolds, an economist at Capital Economics, said.

As the central bank's work is far from done, the economist expects the ECB to announce a further increase in its support for government bond markets next week.

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