According to the report from the European Central Bank (ECB), in July, the M3 monetary aggregate fell by 0.4% per annum after increasing by 0.6% per annum in June. It was the first decline since May 2010. Economists had expected M3 monetary aggregate to remain unchanged.
Meanwhile, the narrower M1 aggregate, which includes money in circulation and overnight deposits, fell by 9.2% per annum after declining by 8.0% per annum in June. The annual growth rate of short-term deposits, except overnight deposits (M2-M1), slowed to 23.9% from 24.0% in June.
Looking at the components' contributions to the annual growth rate of M3, the M1 contributed -6.7% (compared to -5.8% in June), short-term deposits other than overnight deposits (M2-M1) contributed 5.3% (compared to 5.3% in June) and marketable instruments (M3-M2) contributed 0.9% (compared to 1.1% in June).
The data also showed that the volume of lending to the private sector increased by 1.3% per year after a 1.7% per year increase in June. It was the weakest pace of growth since November 2015, as rapid rate hikes dented demand for credit. Economists had expected an increase of 1.4% per annum. The annual growth rate of adjusted loans to non-financial corporations decreased to 2.2% from 3% in June.