Another number to monitor in the weeks ahead is the Eurozone M3 money supply level, which has rocketed to multi-decade highs this year. M3 is the broadest measure of money supply by the Eurozone nations and includes all currency in circulation, bank deposits, money market shares, and debt securities up to two years in duration. Generally, economists believe an increasing M3 leads to price inflation. The money aggregate targeted by the ECB has been coming in at more than 10 percent in recent months.
“The high levels of M3 growth have [the Europeans] worried about future inflation,” Powell says. “Currently, M3 money supply is more than double their reference rate.”
While headline consumer price index inflation currently stands at 1.9 percent, just below the ECB’s 2.0-percent target, any increases would be troublesome for the central bank.
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