The November 2025 monetary data point to a cautious re-acceleration in liquidity, with broad money (M3) growth edging up to 3.0 percent in November and averaging 2.9 percent over the three months to November. This suggests that monetary conditions are slowly loosening, although the pace remains moderate by historical standards. The underlying composition matters.

Growth in M1 slowed slightly (from 5.2 percent to 5.0 percent), indicating weaker momentum in highly liquid balances, while the recovery in short-term deposits and marketable instruments signals a gradual rebalancing towards less liquid forms of saving as confidence stabilises.

Sectoral patterns reinforce this reading. Household deposits strengthened, reflecting improving income flows or precautionary saving, while non-financial corporations maintained steady deposit growth. In contrast, investment fund deposits weakened sharply, hinting at portfolio reallocation rather than broad risk-taking.

On the credit side, momentum continues to build. Claims on the private sector and euro area residents increased, driven by firmer lending to both households and firms. Loan growth to non-financial corporations accelerated more visibly, suggesting improving investment or working-capital demand, while household borrowing remained steady but subdued.

In summary, the latest data portray an economy moving away from tight monetary conditions towards a more balanced phase, where liquidity and credit are expanding cautiously rather than exuberantly.

M3 is the European Central Bank's (ECB) preferred broad measure of money supply. Since January 1999, the ECB has tended to focus on the 3-month moving average of the annual growth rate to judge underlying M3 trends although the significance of its 4.5 percent reference rate has been downgraded with time. The private sector lending counterpart is usually seen as the most important element of the M3 report.

While other central banks have virtually ignored money supply data, the European Central Bank has not. Thanks to the influence of the Bundesbank in organizing the ECB, M3 money supply was established as one of the 'two pillars' of monetary policy used by the ECB, the other being the harmonized index of consumer prices (HICP). While the target for HICP is two percent, the seemingly largely ignored reference target for M3 growth is 4.5 percent as measured by a three month moving average which is compared with the same three months a year earlier.

M3 measures overall money supply. It consists of M1 which is currency in circulation plus overnight deposits and M2 which include deposits with an agreed maturity up to two years plus deposits redeemable at up to three months' notice. Not all M3 measures are alike. For example, ECB M3 is approximately equivalent to the Federal Reserve's M2 measure. Because an increase in M3 leads to price inflation, this figure can also be indicative of the likelihood of future interest rate hikes.