| Consensus | Consensus Range | Actual | Previous | Revised | |
| Y/Y - 3-Month Moving Average | 2.7% | 2.6% to 2.9% | 3.0% | 2.9% | |
| Private Sector Lending -Y/Y | 3.8% | 3.5% | 3.4% |
Highlights
The latest monetary and credit data indicate that liquidity conditions in the euro area continued to strengthen in May 2026, with improvements evident across both money supply and private sector lending. Broad money (M3) growth accelerated to 3.2 percent from 2.7 percent in April, while the narrower monetary aggregate (M1) rose to 4.0 percent from 3.8 percent, suggesting stronger growth in the most liquid forms of money. This points to improving cash availability and deposit holdings, which could support higher consumption and investment activity in the coming months.
Credit expansion also gained momentum. Lending to households edged up to 3.1 percent, indicating sustained demand for consumer and mortgage credit despite prevailing financing costs. More notably, loan claims on the private sector increased to 3.8 percent from a revised 3.4 percent, reflecting a broader improvement in credit intermediation across the economy. The strongest development was observed in lending to non-financial corporations, where annual growth accelerated to 4.0 percent from 3.4 percent, signalling renewed business confidence and stronger corporate financing for investment and expansion.
In summary, the latest data and report suggest that monetary transmission is gradually strengthening, with improving liquidity and credit conditions supporting economic activity. However, policymakers are likely to remain attentive to whether sustained money and credit growth translates into stronger inflationary pressures or reflects a recovery in economic fundamentals. These latest report takes the RPI to 5 and the RPI-P to 3, aligning economic activity in line with market expectations in the euro area.
Market Consensus Before Announcement
The consensus sees money growth slowing to 2.7 percent in May from 2.9 percent in April.
Definition
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.
Description
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.